Reducing chargebacks depends on several things related to your business, and it can be tricky to get right. Customers are the main reason for chargebacks, but you can influence their reasons and decisions for requests. From being honest to correct contact, here are some ideas.
What Are Chargebacks?
A chargeback is when previously paid money into your business bank account is reversed back into the customer’s account. This means the money is taken back. It usually happens when a customer disputes a charge, and there are many reasons for this. For example, payment processing for online pharmacies can have chargebacks because of confusion about a prescription. A payment issuer will hold the money while an investigation of the claim is done.
Reducing Chargebacks with Honesty
The biggest reason for chargebacks is the customer not being satisfied with a product or even being confused. You have a big responsibility here because you must be honest about what you are selling. If you are dishonest and misleading, then you have only yourself to blame when you get a chargeback, and the customer is within their rights to request one in these circumstances. Always show honest product descriptions and be clear about how much money will be charged.
Ensure You Are Recognized on Bank Statements
As mentioned, customers often request chargebacks when there is confusion. And often, this occurs on their bank statements. For instance, a customer looks at their statements and sees a charge they don’t recognize. They will often dispute this with their bank. It helps to make sure customers are informed as to how your charges appear on their statements. And also try to make it clear as well. This is a huge help if you sell adult-only or other personal products.
Have a Clear Returns Policy
There are some customers who change their minds and may want to return a product and request a chargeback even if there is no issue. They can do this sometimes, but make it clear that they and you also have rights when it comes to handling returns and issuing refunds:
- Outline the time frame a customer has to make a formal request in your returns policy.
- Make it clear you can’t accept returns on certain items such as lipstick.
- Always offer credit as a replacement for cash, as this won’t result in a chargeback.
- Define what a return and chargeback are on your policy and make it easy to understand.
- Explain that you have the right to charge customers for returns under certain conditions.
A returns policy can be your best friend when it comes to lowering chargebacks. Include easily reachable links to it on product pages and include specific information in product descriptions.
Install Anti-Fraud Measures
Over 90% of shopping is now done online from the comfort of home. But most people don’t realize how much data they actually share over the web, often insecurely. This makes eCommerce a big target for hackers and data thieves who use data to purchase goods in the name of others. Fraud will result in chargebacks as “customers” have a genuine complaint. Data encryption, multi factor authentication, and geolocation data can help to check a fraudulent sale.
Contact is Good for Reducing Chargebacks
Working and easily reachable contact data is a great way to reduce the number of chargebacks to your business. A customer will almost always try to contact the online store first. If they can’t reach you, they will call their bank, which will issue them a refund, resulting in a chargeback. An email address, phone lines, and social media contact are all easy ways a customer can reach you. You can then work on alternatives like replacements or credit without a chargeback issue.
Expect Chargebacks to Happen
Chargebacks are an expected part of doing business. But they are more common than we would like. Chargebacks cost over $17 billion per year to businesses globally. However, you can expect about a 1% chargeback. So, for every 100 sales, 1 might request a chargeback. Any more than this could indicate something is very wrong with your business, and you can use the points above to assess where you are going wrong. Then again, you could be a target of fraud.
Being honest about shipping, products, and prices is an easy way of reducing chargebacks for your business. A clear returns policy also helps customers understand where their rights and your rights lie. Anything more than a 1% chargeback ratio could indicate serious issues.