Whether your business deals in mobile payments or is an ecommerce accepting online payments, chargebacks are something every merchant needs to understand and be prepared to handle. For those of you who don’t know, a chargeback occurs when a customer disputes your charge with their bank. In most cases the customer is reimbursed the money immediately and it’s left to you as a business owner to get your money back by proving the transaction was valid.
The reality is that there’s nothing you can do to completely stop the risk of a chargeback, there are a few easy ways to lower the risk. This week we’re sharing 5 ways you can reduce the risk of chargeback for your business.
1) Use a name that your customers will recognize on their bill
Your credit card descriptor is the name that shows up on your customers’ credit card bills or online statements, so it’s very important that this name matches your business’ name. One of the leading causes of chargebacks for online merchants is because their customers simply don’t recognize the charge.
If your website is branded differently from your legal name, you should use the name that appears on your website for your credit card descriptor. Just because you share the legal name of your business in the footer of your website doesn’t mean your customers will read it or remember the name by the time the charge pops up on their statement.
2) Be available to answer questions
While a few customers may initiate a chargeback instantly when they don’t recognize a charge, most will actually take the time to do a little research. This is great… Unless your customers struggle to find the information they need.
You want to make sure that you have at least one easy way for customers to get in touch with you if they have questions. You should have an email address or phone number up on you website and you should have a dedicated person to respond to these questions.
We know it can be challenging, especially for startups, to be available 24/7 via phone but the truth is most customers are just as happy with an email address. Giving unhappy customers a way to voice their concerns can help you save a sale and your company’s reputation so it’s well worth the added effort.
3) Don’t make a promise you can’t keep
If you’re a new business starting out, it can be tempting to offer things like a “lifetime membership” but often you’re setting yourself up for failure. In this example you’ve just promised to provide your service their entire lifetime.
This situation has the potential to lead to a lot of chargebacks if you ever decide to change the company’s direction, or worse, if you need to shut down the company. Similarly, promising miracle results with your product will often leave customers feeling like they we’re misled. If your product doesn’t deliver those 6 pack abs in a week, people are going to want their money back.
4) Be prepared to offer refunds!
This is a big one we really can’t stress enough. The truth is that the number one way to reduce your chargebacks is to provide an effective return & refund policy. The reality is, chargebacks were created to protect consumers against scammers and they give consumers a lot of power to get back their money. If a customer’s not happy with your product or service, they are going to get their money back, so it’s better to provide the refund on your terms.
Does your business have any experience handling chargebacks? What do you do to minimize the risk? Be sure to let us know in the comments below and if you’re not already follow us on Twitter for all the latest payment news!
- http://www.creditcards.com/ – http://www.creditcards.com/credit-card-news/8-merchant-tips-avoid-chargebacks-1455.php
- https://www.braintreepayments.com/ -https://www.braintreepayments.com/blog/7-ways-to-reduce-chargebacks/
- http://blog.paylane.com/ – http://blog.paylane.com/chargeback/