Chargebacks are a real problem for any company, no matter what products it offers or in what sector it operates.
How do you challenge chargebacks and can businesses challenge bank chargebacks? This article will give you the answers to these questions.
The negative aspects of chargebacks
Chargeback arises if the client asks for a money return for the purchase not from the merchant but directly through the bank. Frequently it happens because of the refusal of the merchant to return the funds voluntarily. Chargebacks have a very negative impact on the business credit history and can lead to serious consequences.
Let’s start with the fact that for each initiated chargeback, the merchant is obliged to pay a fine of $ 20-100. But this is not the worst outcome.
When the percentage of chargebacks reaches a “critical” value, the bank may block your merchant account, and you will no longer be able to accept credit card payments.
Why is it so important to fight chargebacks?
The bad news is that it’s impossible to completely avoid even the slightest chance of receiving chargebacks. Yet you have to fight them, because every chargeback takes time away from a company’s operations and also hurts its reputation, which can be substantially damaged.
The best way to challenge a chargeback is to do everything you can to prevent it. We’ve put together some tips to help you get rid of a lot of chargebacks:
- Do your best to make disputing and refunding easy and straightforward. Why do many customers often send reviews to credit card companies? Because it doesn’t take a lot of time and it’s very easy. Your job is to show customers that it’s even easier to contact you and resolve the issue.
- Create a list of frequently asked questions that are directly related to chargebacks. After reading the FAQ, customers should not be left with any questions or doubts.
- After the customer has purchased the product, send them a quick email to check if they are happy with their purchase and to see if there are any unresolved questions or issues.
- Be sure to train your staff on how to avoid chargebacks. First and foremost, this includes staff who deal directly with customer transactions and who are involved in customer service. Teach them how to recognize potentially fraudulent transactions by using automated clearing house payment processing best practices.
- Examine your chargebacks. Analyze pos-system reports to get a sense of the underlying trends that indicate customer fraud.
- Use specific software to prevent chargebacks. For example, Square’s pos-terminals have a broader functionality and provide tools that track suspicious transactions and prevent fraudulent transactions in addition to basic functions.
If you do receive chargebacks, you will have to deal with them. In this case, we can recommend the following:
- Analyze all claims related to chargebacks in detail. Of course, you don’t have to fight every chargeback, but it’s even worse if you do nothing. In that case, you will lose 100% of your profits. That’s why always try to prove your point.
- Bet on high-quality customer service. Not all companies think that proactive customer service is a great way to minimize the chance of a chargeback. Do your best to get customers to contact your customer service department as quickly as possible.
- The seller will have 7 to 10 days to dispute a chargeback. During this period, you can contact the customer and find out the detailed reason for the chargeback. Finding out all the reasons and satisfying the customer’s demands may induce the customer to cancel the chargeback.
- It is not worth wasting time and effort on those transactions that are processed by the acquirer. It is not uncommon for the acquirer to initiate an automatic representment on behalf of the merchant. That’s why it’s so important to know which disputes are subject to automatic representment and not waste your time on them.
- Gain invaluable experience by following most chargebacks from the beginning to the specific outcome. Try to understand what caused the chargebacks. If most of them are initiated by fraudsters, it may be time to introduce additional fraud prevention measures.
Of course, the company would work out every chargeback in detail, but in practice no one does, because every chargeback consumes not only company resources, but time and resources as well. What’s worse, it can be difficult to determine right away whether a chargeback is worthwhile or better not to.
Remember, no one is immune from chargebacks. Regardless of the service you offer, you may encounter this problem. The task of the merchant, in fact, is to provide the highest quality services. This contributes, if not to eliminate, then at least minimization of chargebacks.