Chargebacks are some of the nightmares businesses, and especially those accepting credit cards fight every day. Chargebacks are irritating and can sink a business in no time if no sound measures are in place. The good news is that most reasons that result in chargebacks have a solution. While there are several chargeback preventions out there, this article takes you through the various ways small businesses can reduce the frequency of chargebacks, and best practices.
1. Make sure goods and services have been shipped and received
One reason why customers dispute transactions is because the items they ordered were never shipped. And if shipped, they never received them. They can also dispute a charge is they receive defective products. The best approach is making sure your customers have received their packages and in good condition.
2. Impose sound guidelines for orders made via telephone or mail transactions
It is ok to allow your customers to place orders through phone calls or emails but make sure you have a sound policy that details how such transactions are handled. For example, you can make it mandatory for every customer who places an order via telephone to give full names, ID number, address, etc. Otherwise, some customer will order items via phone and later dispute such charges.
3. Don’t accept expired or invalid credit cards>
Accepting invalid or expired credit cards will only increase the frequency of chargebacks. This happens when your system cannot locate valid account numbers of the credit cards that have been used. That is not something you want to happen to your business. The best solution to this is configuring your system to reject any invalid or expired credit card.
4. Address technical errors
Consider a scenario where a customer presses the pay button twice, and your system responds accordingly by charging the customer twice. This is something you can address on your side. Good maintenance practices will help keep your merchant system functional and reliable.
5. Address human errors
Human errors are also a leading cause of chargebacks. Human mistakes are common when processing credit cards manually. Training your employees how to handle credit cards is one way to reduce chargebacks. Alternatively, automate the entire process. You just need to use a reliable merchant system.
6. Communicate clearly
Providing as much information as possible reduces the frequency of chargebacks. This is because your customers clearly know what steps to follow to complete transactions. Further, this prepares them in advance of steps to take if they notice charges they are not aware of. Make sure to provide contact information so your customers can reach you before disputing filing chargebacks.
7. Focus on exceptional customer services
When you offer excellent customer services, your customers will always come to you if unhappy before filling chargebacks. If possible, set up a team to handle chargebacks related cases.
8. Respond quickly
To stop unhappy customers from filling for chargebacks, you may want to respond promptly to all your customer concerns. A good customer service team can help you respond timely to all chargeback cases. For example, consider when a customer is filing a chargeback because he did not receive an item, yet there was a delay. Your team will respond quickly to stop such a client from filing a chargeback.
9. Leave a paper trail
While you may want to automate everything fully, it is still worth it to keep any paper trail that shows your customers authorized the purchase. That way, it will be easy to dispute a chargeback even when your systems fail.
10. Practice good fraud prevention techniques
Today there are several things you can implement at the point of sale to prevent fraud and resulting chargebacks. Some of the things you can do include:
- Swipe the credit card whenever possible – avoid keying in the card number.
- Compare the card signature to the signature on the receipt and make sure they match.
- Never complete a transaction if the authorization request was denied. Instead, request for other forms of payment.
- For online orders, ask the security code (the 3-digit CVV2 or CVC2 code). In the case of American Express, ask the 4-digit CID code.
11. Make the most of the latest technology
Take advantage of the latest technology to stop fraudulent transactions and prevent unnecessary chargebacks. For example, services like Verifi allow you to contact the issuing bank way before the acquiring bank receives the request for a chargeback.
You may want to make sure you are using the latest hardware in the market to process your card payments. This way, it will be possible for you to reduce the frequency of chargebacks.
12. Confirm that the buyer is the actual cardholder
Another way to stop fraudulent credit card transactions is by making sure the buyer is the actual cardholder. It is effortless to verify. Just ask for the phone number, ID number, full names and other finer details you think will help you identify the buyer.
Growing a business is never an easy task as it sounds. You will face a lot of challenges, some of which like chargebacks are a big threat to your hustle. We have shown you how to lower or prevent chargebacks. The ball now is in your court. All the best!
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