Chargebacks can feel like a suffocating noose around a business’s bottom line and profit margins. It’s been a tough year for small companies, with problems ranging from having to close due to Covid-19 to obtaining government loans to remain afloat. Credit card fraud is another cash suck that is currently on the rise.
Chargeback fraud, also known as “friendly fraud,” is a common and stressful issue. Chargebacks must be managed by every company that sells online. What is the reason for this? You made the sale and had already paid for the income, only to be asked to return the money and pay a fee on top of it. Too many chargebacks not only hurt your credit card processing company’s credibility, but they also hurt your business’s bottom line. But first, let’s go over the fundamentals. What is a chargeback, exactly?
HOW CREDIT CARD CHARGEBACK IS BAD FOR YOUR BUSINESS
Even if there has been no fraudulent activity, a customer can request a chargeback. They could do so simply because they were dissatisfied with your product or service, or because they feel it was misrepresented. Some people may also ask for chargebacks if they don’t notice a charge on their bill. Chargebacks must be taken seriously as a company owner. What is the reason for this? When you get a chargeback, you lose money on chargeback penalties, as well as the money and time you spent packaging, shipping, and selling the product or service.
HOW TO KEEP YOUR BUSINESS SAFE FROM CHARGEBACK FRAUD
Since you will not be reimbursed for the goods or services provided. Some chargeback claims will cost you more than the transaction’s value due to various processing fees levied by financial institutions. As a result, you must take precautions to safeguard yourself! You must put in place solutions to deter fraud for your online business in the same way that brick-and-mortar businesses do.
PREPARE AN EASY-TO-UNDERSTAND REFUND POLICY
You must show your refund policy on your website, register, and print the information on any receipt if you want to prevent chargebacks. Be as precise as possible when stating the return window, exclusions, and restocking fees.
CREATE CLEAR BILLING DESCRIPTORS
As easy as it might seem, providing a straightforward merchant descriptor (a simple line on the cardholder’s statement that specifies your business name), date, and transaction amount would reduce needless disputes. Aside from that, you must keep careful records to assist you in fighting chargeback issues.
DEFINE SHIPPING EXPECTATIONS
Because of the Amazon impact, many consumers demand lightning-fast delivery these days. This is why you must be specific about your expected delivery times. After each order, give a copy of your shipping policy to the customer and post it on your website.
LISTEN TO CUSTOMERS
Never ignore customer emails or phone calls. Nothing is more aggravating than attempting to file a complaint while getting no response. Create automatic email and phone systems to notify customers when a callback will be made.
