A chargeback occurs when a customer requests their bank to return their funds for a purchase or when the customer’s banking partner detects unusual activity or a problem with a transaction. A chargeback is handled directly by a card issuer. Lost or damaged products during shipping, a customer not receiving a product, a faulty product or service description, technical error, and duplicate billing and fraud are all reasons why a customer can ask for a chargeback. The best way to deal with chargebacks is to ensure standardized business procedures and by offering the best purchasing experience to your customers.
How to deal with chargebacks in your merchant account
Keep a detailed record of transactions
Over time, chargeback fraud has become more common. Unfortunately, it is somewhat easy to purchase online and report transactions to an issuing bank as a fraudulent transaction. Every year, merchants lose billions from chargeback fees, transaction reversals and lost merchandise, caused by dishonest consumers who buy commodities and then, later on, claim they never did. These cases are often lost by the merchant for lack of providing clean and simple records. It’s vital that your sales receipts are legible and act as a valid proof of documentation when it’s time to fight a chargeback dispute, which is why complete and accurate record keeping is essential.
Set well defined shipping expectations
Small and medium enterprises should have a clear set of shipping expectations since most clients expect lightning-fast shipping of ordered products. With that said, as a merchant, you should advertise and post your shipping policies on your website and offer a copy after each purchase. You should also communicate any known delays in delivery and the expected shipping time. A chargeback for services not received can be corrected with a signed delivery receipt which contains the carrier confirmation, evidence delivery and shipping details.
Have a detailed, easy to understand refund policy
A business owner needs to have a clear and comprehensive refund policy if they want to avoid chargebacks. You need to post your return policy information on your business website, at the registers and print out all the details on each receipt. Having a comprehensive and straightforward return policy can drastically lower a client’s likelihood to pursue a chargeback. Return policies should be addressed clearly and cover any particular situation. Be specific when it comes to stating any restocking fees, exclusions and window time for returns.
Create a comprehensive product or service descriptions
An online business owner should ensure that they provide comprehensive descriptions of their products and service policies to avoid any liabilities that the consumer may claim. In case of any unsatisfactory purchases, the penalty will most likely fall on the consumer. This is important, especially for e-Commerce merchants, since the customer will have to decide without viewing the product in person. The product or service description will help the merchant avoid and deal with any chargeback.
Offer your company’s contact information
It’s vital to provide your company’s contact information on the website and receipt to help deal with chargebacks or card processing errors. A company’s contact information is vital since it helps clients reach out to you directly without initiating a chargeback. If a customer has trouble locating the contact info for your customer service team, they will most likely initiate a chargeback. It would help if you also gave quick and immediate feedback to any of your customer’s claims or issues.