Unfortunately, chargebacks are inseparable part of running an e-commerce store, however you can lower your percentage of chargebacks by using the following strategies:
Describe your products clearly
Many chargebacks happen exactly because of the disappointment the customer is facing when they receive the ordered products. They might be not satisfied with the product’s quality, model, size, colour or function.
To prevent this kind of chargeback you need to provide your potential customers with sufficient information about your products prior to the purchase. Pictures of the products you are selling and their detailed descriptions should be available on your website. For example, if you decide to sell handbags you need to describe the main features of the bags, especially the size, material of which the bag is made of… This way you will easily prevent chargebacks with a reason “product not as described”.
Communicate with your customer and provide 24/7 customers support
Good communication between you and your customers is the key for a successful business. Many chargebacks can be avoided if you provide your customers with a quick responsive customer support service. Answering all their questions about their purchase in a short time period will instantly make you a trust-worthy merchant with a high level of standards.
You also need to inform your customers about the terms and conditions regarding to their purchase. The total transaction amount should be clearly visible, and no additional charges should be hidden, that the customers won’t feel mislead and will have no reason for a chargeback request.
Use a reliable shipping company
When selling physical products, you need to choose your shipping company very carefully. If they deliver your product damaged or with a delay, customers will certainly initiate a chargeback. This kind of chargebacks can be smoothly prevented by using a reliable shipping company with an online tracking system. Besides that, it is very important to communicate your customers the exact date of delivery.
Customers also don’t like to pay for a product before receiving them, so make sure that all products have been sent before depositing a sales recipe. Customer who hasn’t received the product yet, but sees it on his credit card statement, is very likely to initiate a chargeback.
Have an easy refund policy
Let your customer know what to do if they are really unhappy with their purchase with a refund policy on your website. An easy refund policy will stop many customers from initiating a chargeback request.
Make sure your documents are clear
Every year merchants lose millions of dollars due to “friendly frauds”. It happens when a genuine cardholder purchases an item or service and later, after receiving it, claims he/she never ordered anything. At this point you are not dealing with a typical fraudster, but rather with dishonest person, who initiate fraudulent chargeback hoping to get free stuff.
To fight this kind of chargeback, you need to make sure that all your records, especially the sales receipt, are clear and legible, so nothing can be misunderstood.
As there is a certain time limit in each step of the chargeback cycle, a quick respond can be your greatest tool. In this way customer’s misunderstandings can be resolved easily. For example, if your customers claim that they never received the credit for the refund, you will be able to prove the opposite easily and avoid a potential chargeback. On the other hand, a delayed respond can result in a chargeback loss.
I hope reading this article won’t frighten you from opening your own e- commerce store. It is true, that accepting online payments can make you a headache, but it is just the risk you need to take, if you want to make your business thrive. Keep in mind that online payments are our future and with the above mentioned strategies, you will be able to lower the percentage of chargebacks to a minimum and protect your business from a potential loss.