When faced with one, you can accept the reversal and count your loss or fight the claim with compelling evidence. The second option appeals to many merchants, but for you to win such a case, your evidence must be strong enough to warrant a positive outcome from the issuer and the acquirer.
Should chargebacks concern merchants?
Chargebacks may seem like a simple issue of accepting or fighting customer disputes. But it goes deeper than this. The more chargebacks you get, the following issues arise:
- A dent in your revenue. Not only do you refund the chargebacks whose disputes you lose, but you also pay a fee for each chargeback. These fees all add up, and you’ll be even further out of pocket.
- Reputational damage. In an age where user-generated content rules, you don’t want to best known for not delivering what you promise.
- Payment delays. Once you’ve reached a certain chargeback threshold (there is no set number, and this depends on several factors), you’ll likely lose your ability to accept payments.
The sooner you can minimise these disputes, the easier it’ll be to protect your business on all fronts.
How to win chargeback claims
Often, customers will initiate chargebacks if they don't receive the goods or services they purchased or when they think their card was used fraudulently. Can you do anything about this? Of course!
- Implement two-factor authentication
Criminal fraud ranks high as a reason for chargebacks. After all, if a customer realises that someone illegally used their card to purchase goods or services from your business, they can fight the charge. You can reduce the likelihood of this type of fraud taking place by using two-factor authentication.
Each time a customer wants to buy anything, their card details will get verified by their card issuer, after which the customer will receive a unique code sent to a trusted location such as an email or phone number. Entering this code signifies they have approved the transaction, allowing you to fight back future claims.
- Address merchant errors
Have you thought about the many ways you can address customer concerns before they are escalated to chargebacks? Consider these:
Respond to customer concerns. Sometimes, a customer may complain about a product or service and follow up with a chargeback. You can reduce such instances by handling customer complaints promptly.
Have a clear returns policy. If you sell non-refundable goods or services, ensure this is clear in your policies and include measures to deal with special circumstances. Otherwise, any time someone realises they can’t get a refund, they’ll likely file a dispute.
Update shipping policies. Your product page may show that products arrive in 2 days only for a customer to wait 5 days and file a dispute. If you have changes to your delivery timeframes, inform your customers ahead of purchase on the checkout page or via email post-purchase.
Be clear about pricing. Your customers should know the costs of goods and services before they pay. You can’t add extra charges once they’ve confirmed the amount and have been directed to payment.
Don’t forget to include the correct details on products and services. If you incorrectly label a shirt as blue and the customer receives a black one, you can expect a chargeback.
- Watch out for friendly fraud
Merchants operate based on trust and hope their customers will do the same. While many customers have no intentions to steal from you, some will purchase products and services and file chargebacks just to get their money back, even if you delivered the product or service. The easiest way to deal with this is to keep records of all your sales, respond to customer queries on time, and ensure you have secure payment systems with several protection layers.
Stop chargebacks before they happen
While you cannot stop all chargebacks, you can always reduce your losses by investing in secure payment channels with adequate protection. payabl. provides secure payment gateways that help you prevent criminal fraud and provide sufficient evidence for friendly fraud claims. Combine these systems with reduced merchant error, and you can significantly reduce chargebacks.