How to Prevent Chargebacks from Damaging Your E-Commerce Business

Chargebacks happen for all kinds of reasons, but when they do, it can seriously damage a business. A pattern of regular chargebacks is a red flag to lenders, and it could lead to your merchant account being frozen. You will also be charged a fee each time a chargeback is lodged against you by a customer. In time, these fees all add up and cost your business money. With credit and debit cards being the primary source of payment for an e-commerce business, it is essential that you are on your guard against chargebacks.

When a customer disputes a transaction, the card company immediately contacts your merchant account provider and requests the funds are debited from your account. You lose cleared funds and are hit with a fee.

Chargebacks are there to protect the customer, but for an e-commerce business, they are a nightmare. Since lenders adopt the view that the customer is right unless proven otherwise, it can be difficult to dispute chargebacks. You can hire a company like thechargebackcompany.com to fight your corner and recover legitimate funds, but prevention is better than cure. To stop chargebacks costing your business money, put a strategy in place to minimize unfair chargebacks.

Check for Fraud

Fraud cases are on the rise as criminals take advantage of stolen credit cards to purchase goods and services online. If someone uses a stolen card to purchase goods from you, it’s game over. Always check card details if transaction details don’t match. Implement secure payment gateways and shopping cart systems to reduce online payment fraud.

Train employees to spot the signs of card fraud and suspicious card transactions. For example, if the billing and card address don’t match, this is a red flag, so put a stop on the transaction until you can verify the customer’s details.

Provide Great Customer Service

Customers are more likely to use a chargeback to obtain a refund if they feel they have no other option. Work with the customer to resolve issues first. If there is a problem with the order, try to sort it out. Get in touch with them to see what has gone wrong, and politely offer to sort things out. You will be notified if a customer has requested a chargeback, so act swiftly before fees are applied to your account.

Check Records

Sometimes, forgetful customers request a chargeback because they have no recollection of the transaction. If you decide to dispute the chargeback, the more information you can provide, the more likely you are to see a positive outcome.

Know When to Fight

Smaller retailers often assume it’s easier to roll over and accept the chargeback, but in certain circumstances, it makes sense to fight. Weigh up the costs of hiring a firm to help you fight your case, or take it on yourself.

Be transparent about costs on your e-commerce website. Hidden fees and shady delivery charges are likely to cost you money and damage your business. The same goes for free trials that become recurring subscriptions if the customer doesn’t cancel, so think carefully before using this business model.