Chargebacks will not only cause you huge losses but also ruin your firm’s reputation among credit card processors. So when trading goods or service through the internet, always make sure you watch out for chargebacks.
Because operating a business profitably also means taking measures to ensure you have the fewest chargebacks, here’s a guide through what chargebacks are and tips on how to reduce their incidence.
What is a Chargeback?
We may refer to a chargeback as a disputed transaction. In other words, it is any charge a consumer disputes on his/her credit card. When a customer files a claim, the retailer must reverse the transaction to refund the money.
In essence, Chargebacks are designed to protect the shopper from unauthorized transactions. A buyer can simply file a dispute instead of arguing with the seller on the validity of a transaction.
What causes Chargebacks?
There are many reasons a shopper would initiate a chargeback. And understanding these reasons can help you fight against them. Here are some common causes;
Chargeback fraud or friendly fraud occurs when a dishonest customers use chargebacks carelessly to cause your micro-business significant losses. The consumer enjoys the service or product and then chooses to file a claim against you as if they didn’t receive whatever they paid for.
Initiating chargebacks on legitimate transactions is a common habit among dodgy buyers. Be cautious.
- Human Error – there’s the possibility of an error if an accountant is manually processing the credit card transactions. Avoid manual processing at all costs.
- Duplicate charge – Sometimes, due to errors in the system, a customer’s credit card may be charged two times for a single transaction. A duplicate charge is also possible if the customer hits the PAY button more than ones.
Late Shipment of goods or Delayed Service delivery
Failure to ship ordered items or delayed service delivery may prompt a customer to dispute a transaction. That’s why you need to ship the exact goods a buyer offers, keep receipts and be sure to track whatever item you send.
Unauthorized mail or through-the-phone transactions
Customers may intentionally deny making a transaction via mail or phone. Therefore, if you’re the merchant that accepts phone orders, always ask for as many details as you can— particularly the customer’s address and CVV of his or her credit card.
Invalid account or credit card numbers
If your system is not configured to rebuff any invalid or expired cards, then you’re in for multiple chargebacks. A chargeback is possible if the system fails to locate a legitimate account number of the used credit card. Find a tech support merchant account holder to check your systems and make the necessary updates.
The above are the most common causes of high chargeback levels. Most of them are things that require only a little attention. Start today to significantly cut down the number of chargebacks on your company.