How to avoid and resolve transaction disputes before they become chargebacks.
29 August 2021
What exactly is a chargeback?
Chargeback is an amount reversed from a merchant’s account to the customer’s account when there is a violation in the services provided to the customer. Chargebacks are a reversal of payments to a cardholder’s account by the bank in case the cardholder is duped by a merchant. A merchant has to incur some charges due to a chargeback. In the case of a chargeback, a customer is credited and a merchant is debited when the customer provides significant evidence that the terms and conditions of a transaction were violated by a merchant.
Why a Chargeback?
A chargeback may be initiated in various cases, some of which are as:
If the customer claims that the goods weren’t received or the goods received were significantly damaged beyond the scope of repairment.
If the customer claims that the goods received were different or had significant specification changes rather than the one described by the merchant.
If a customer claims that the merchant did multiple transactions for a single unit or did unauthorized transactions with the consent of the customer.
If the customer claims that the amount charged was more than the mutually agreed purchase price of the item.
If the customer claims that charges were added erroneously.
Why avoid chargebacks?
The main motive in avoiding chargebacks is saving your money. In case of a chargeback, the merchant will not only have to pay the amount charged to a customer but will have to incur some additional amount by your merchant services for the investigation of the evidence and resolving the issue.
Moreover, chargebacks lead to significant deterioration of business goodwill and reputation. In the present era of social media, a customer may share his or her case on social media and thus leading to broad communication with your potential future customers, which will hurt your business.
Not just this, if your financial service p[rovider feels your chargeback rate is higher, they may terminate your account, thus increasing the hassles for you.
Chargebacks are frustrating! aren’t they?
How to Avoid Chargebacks?
Have clear policies such as return, refund, and terms of service policies :
Keep simple, clear and well-written privacy policies on your online store handles be it your website or Facebook page. Your business policies should be visible to everyone so that your customers know exactly what they are dealing with.
Keep your contact details accessible to your consumers :
Your customers should be able to contact you easily in case of any queries about the products that you sold to them so that disputes get solved first hand rather than escalating them.
Provide in detail product descriptions and specifications :
While selling your product, provide all details about the product clearly to the customers. Moreover, you need to keep accurate pictures of your products taken from different angles so that your customers get what they order.
Get Customer signature for card usage invoices :
Customers won’t be able to claim unauthorized use of their cards at your payment terminal if you get their signatures on invoices. This will help you be extra secure while dealing with your customers.
Provide responsive customer support :
Having responsive customer support is a great way in handling customer complaints, queries, and dispute resolutions. This leads to lesser chances of involvement of third parties in any dispute thus leading to quick issue resolving.
Ship with online tracking and give realistic delivery dates :
Online tracking lets customers keep an eye on their product in transit, it not just provides the information but helps a lot in the trust-building process. And providing realistic delivery dates keeps preventing customers from prematurely filing disputes.
Buy shipping insurance :
Many things can also go wrong in transit that is why keeping fragile and expensive items insured in shipping is a great way in managing any untoward issues.