Brief Guide on Chargebacks: How to Protect Your Business

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Chargebacks are one of the major problems for every business owner who sells products online. It can lead you to enormous losses and, without proper actions, it may even threaten you with bankruptcy. This is why it is important to learn everything about it, including the best chargeback protection measures.

Once you start your online business, no matter whether it is big or small, you have to find out everything about chargeback. It is a threat not only to your income but your business’ reputation on the market. If you still don’t know anything about chargebacks, pay attention to this article.

About Chargebacks

Chargebacks are transactions that customers receive back. After a short dispute, a seller has to reverse the transaction, so a buyer can get back the money. This system was created to protect the customer from transactions that were not authorized. The customer does not have to prove anything to the seller anymore. Instead, they can easily start the chargeback dispute.

Some customers can cause the problem to the business on purpose. In rare cases, chargebacks can be caused by simple bank mistakes. Regardless of the cause, it is better to avoid chargebacks.

Reasons

The reasons to ask for chargebacks are different. Some customers ask for money back because of the bad quality of goods. Others are frauds eager to earn money on transactions. It is highly important to understand the reason for every chargeback that was required. This knowledge may decrease the number of such cases. Here are the most popular reasons:

  • Defective or damaged during the shipment lot. This is the most classic reason for the chargebacks requirement. If the customer asks for one item and receives another, it will also cause a dispute. The product can get lost during the shipment. Therefore, you have to keep all the receipts and track the goods until their delivery.
  • Problems with the credit card. Unauthorized transactions rarely happen, but still, they happen. Customers are able to deny any phone or email transaction. If your business provides the phone call order, you have to ask for detailed information about your customer and receive their total agreement on the transaction. The best option is to record all the conversations. You also need to find the CVV2 of the card customer uses.
  • Invalid card. If the card is expired, make sure the system you use does not accept it. If the system can’t track the valid number of accounts, you may have to deal with the chargeback.
  • Double payment. This is a popular technical problem, which can be easily removed with a proper diagnostic. A system error can cause double processing of the payment, and charge the customer twice. If everything is alright with your system, make sure that the customer did not press the Pay button two times.
  • Cleric error. An accountant can make a mistake in calculations which will lead to a further dispute. You have to avoid manual payment processing in general.

Protect Your Business

Chargebacks are a step back in your business. They consume your time, efforts, your money, and the products you sell. They also damage your reputation on the market. After you learn the possible reasons for chargebacks, you have to find out how to protect your business from them:

  • Stick to your recognizable name in the business. Customers rarely ask for chargebacks when they send transactions to the same name of the company they order the goods at. Don’t use your personal credit card or discuss the different names with your clients. If you have different brands and company’s names, make sure your clients know about it, or they can easily get scared and initiate the chargeback.
  • A phone number in the billing statements increases the trust between a buyer and a seller. Print your company’s number so that your customers can call you if they are doubtful about the charges. It simplifies the whole process and decreases chargebacks.
  • Fight against frauds. You have to provide security to the credit card owners. Frauds make transactions instead of them, and they later call for chargebacks. It becomes your responsibility to protect your clients. You have to make sure that the customers do not pay with stolen cards. There are fraud tracking mechanisms that are simple to install in services like Commission Junction. Sometimes scammers enter the system as affiliates.
  • Ask for address and personal details, including a phone number, if you want to improve the security system. Some banks offer a fraud recognition service that you can use in your business too. Protect your customers.

Cut the Chargeback

You can use all the tools at once to protect your business from losses. Ensure that your system of transactions is safe. You can monitor it once a month. Check whether your products are reliably packed and come without defects.

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