The number of chargebacks has been decreasing in the last few years. However, in 2020, the chargeback-per-transaction ratio was still at 1.94%, which corresponded to a 3.81% revenue loss for businesses across the globe (Midigator report). Preventing chargebacks is an important mission for every business, and one that has been eased by technology and innovation. In this article, we will discuss all-things chargebacks and how your business can avoid them to maximise revenue.
A chargeback happens when a customer disputes a transaction with their card issuer. Usually, chargebacks are requested after an unsuccessful request for refund. If a customer is unable to get a refund for the purchase they made, their next step would be to request a reversal of the transaction to their card issuer. Whilst refunds are dealt directly with the merchant, chargebacks are dealt with the credit card company.
Customers can initiate disputes for a variety of reasons, including fraudulent or unauthorised transactions, being charged for products that were faulty or never got delivered or the amount charged was incorrect. Chargebacks are often times a complex process that may involve a lot of back and forth between the merchant’s bank and Issuing bank.
A straightforward return policy can prevent customers from initiating chargebacks, so it is important to ensure that your return policy information is clear and easily accessible on your website. Not only will this prompt customers to go directly to you to deal with their purchase issue, in the event of a chargeback, a clear policy will also facilitate negotiations.
Equally important- answer promptly to customers’ queries, particularly regarding requests for refunds. A late response (or no response at all) might be enough for them to decide to initiate a chargeback with their bank. Customer service can never be underestimated, especially when your customers are trusting you with their bank details and personal information.
Invest in security tools for your website, and let your customers know that your website is safe and can be trusted. Having fraud-prevention tools installed in your website, or choosing PSPs that have strong security functionalities will limit your chances of getting chargebacks. This is because chargebacks are often times initiated due to a fraudulent transaction (for instance, if somebody stole your customers’ card details and made a purchase). If you can avoid fraudulent transactions on your website, you are also avoiding chargebacks. At minimum, you should use traditional verification tools such as AVS or 3DSecure for your website, and always ensure you comply with regulations.
Share your contact details with your customers, and make sure these are visible on your website. It is important to have your phone number and email address visible, because that is often the first means of communication customers will try out when requesting a refund, asking for more information or making a complaint. Make sure that your billing description states clearly the name of your company, so there isn’t any confusion related to who is charging your customer.
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using a variety of payment technologies and providers around the globe.
In a world where consumers payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.