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How Recent Consumer Trends Are Affecting Service Chargebacks

How Recent Consumer Trends Are Affecting Service Chargebacks

Payments

How Recent Consumer Trends Are Affecting Service Chargebacks

One of the most significant challenges merchants in the Middle East are currently facing is increased service chargebacks. These are commonly caused by a number of issues, including goods or services not delivered, issues with quality, delays, technical booking problems or even wrong items delivered.

Today we will be looking at this growing trend and what businesses can do to mitigate service chargebacks.

What is a service chargeback?

Put simply, chargebacks are disputed transactions. This happens when a customer makes a dispute on their credit card or a purchase, leading to a reversal of the transaction and the customer receiving their money back. Any business selling goods or services online can experience this, and many have seen a surge in recent months caused directly or indirectly by shifting consumer behavior.

Recent Consumer trends

Recent Consumer trends

Consumer demand for non-essential products and services has dropped considerably. Individual buyers and households are now more hesitant to spend due to the perceived economic challenges ahead– something that many businesses across several verticals have already suffered from.

One primary example is the airline and travel industry. Ultimately, millions around that world have cancelled unnecessary travel plans this year, directly leading to reduced flight bookings. This has also impacted a number of other businesses in the hospitality and entertainment industry, such as hotels, restaurants, theatres, and car rental companies, to name only a few.

Having said this, other merchants and businesses have seen a growth in sales from higher demand for their products and services, especially if their operations are more suited to online sales and delivery.

Typically, businesses are usually able to prevent customer dissatisfaction and complaints leading to refunds (and ultimately to chargebacks) with a strong customer service approach, tailored to specific product offerings and a loyal customer base. Whether its delays, damaged products, or issues with quality, a customer service call center is one of the best ways to reduce the impact of complaints and chargebacks.

In recent months however, there has been a huge strain on customer service infrastructure due higher volumes of online sales and increased customer concerns about product deliveries. Together with a drop in manpower due to social distancing measures, this has made it harder for businesses to mitigate chargebacks and customer frustrations through their customer service operations.

Increased chargebacks

Increased chargebacks

For many of the reasons above, merchants are exposed to the serious changes taking place at the moment. With operations disrupted so significantly, the chance of customer dissatisfaction increases massively – leading to a growing trend of chargebacks.

Essentially, more chargebacks mean lost revenue, profit loss, extra fees and reduced customer loyalty. And while this is an inherent part of any business that processes online payments, the risks over the last few months of merchants being seriously hit by higher volumes of chargebacks has increased significantly.

How to mitigate excessive service chargebacks

How to mitigate excessive service chargebacks

Merchants need to start building a strategy now for mitigating excessive chargeback risks. This could help alleviate many of the problems you face due to the direct or indirect impact of damaged supply chains and changing consumer behavior.

You might not be able to remove risk completely, but recovering disputed revenue, addressing customer concerns and simplifying your returns policy could all help you to weather the storm until global retail and purchasing behavior returns to normal.

Our recommendations for reducing the impact of chargebacks include:

  • Build a robust customer service network
  • Monitor chargebacks and respond to issues quickly and diligently
  • Establish a set protocol for handling payment disputes
  • Pay extra attention to the quality of your services and products
  • Offer accurate shipping and delivery predictions
  • Create a simple refund and returns process for you customers
  • Offer customers completely transparent order placements and tracking
  • Request customer ID when making deliveries to reduce fraudulent product acceptance

Support from the PAYFORT Risk Team

Support from the PAYFORT Risk Team

Finally, we recommend working with a payments processing partner who can help implement the above best practices, provide you with monitoring support and additional payment processing guidance.

At PAYFORT, we’re dedicated to keeping businesses alive and thriving as we experience a huge cultural and societal change, not just in the Middle East, but globally. Our support team can help you handle payment disputes, monitor chargebacks and implement smoother payment processes to reduce the impact of chargebacks on your business.

Register to our live webinar

To find out more about chargebacks please click here to register for our Know Hub Webinar Series on How to avoid or reduce service related chargebacks

After registering, you will receive a confirmation email containing information about joining the webinar.

Sources:

– https://www.emarketer.com/topics/category/coronavirus
– https://www.statista.com/topics/6239/coronavirus-impact-on-the-retail-industry-worldwide/
– https://www.semrush.com/blog/ecommerce-covid-19/

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Mohammed Shibly

Risk Manager

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