Among the most important things you need to consider (and plan around) when it comes to sales and revenue is how to avoid chargebacks on your merchant account. Chargebacks occur when the card-issuing bank is asked by your customer to request a refund from you. Aside from refunding the amount, other processing fees will also be charged, which makes the chargeback something to be seriously, strenuously avoided.
One quite common cause of a chargeback is the situation where the customer does not recognize your company’s name on their credit card statement. You can reduce these occurrences by ensuring that your customer will recognize your trading name by specifically highlighting it everywhere possible – your store receipts and bags, and your website’s checkout page, terms/conditions page, order confirmation and e-mailed receipt.
Below are a few other helpful hints for merchants trying to avoid the (mostly) unnecessary merchant account chargebacks.
- Never complete a transaction if the authorization request was declined. Request another card from the customer or offer another payment option such as electronic checks or old-fashioned cash.
- Enable duplicate checking safeguards in your payment gateway. This option avoids the same transaction being charged more than one time. It is possible that some chargebacks are due to duplicate transactions.
- Fully disclose refund, return and cancellation policies at all times, in your store and on your site. Make the information easy to find and read to ensure customers are aware of your policies. If a customer decides to make a return or request a chargeback, your full disclosure about returns and refunds prior to the sale may help you win some of the disputes.
- E-mail customers a receipt after the sale is made. Use the name of your company and clearly, precisely outline what the customer was charged.
- Cancel recurring transactions promptly if the customer requests the cancellation. Remember to send the customer an e-mail confirming the product or service will be canceled on a specified date.
- Have direct communication with your customers. For instance, if there happens to be a delay in the delivery of the merchandise or service, notify the customer immediately. This helps avoid a chargeback for “merchandise not received” or “services not rendered.” Good communication keeps the customer returning,
- Ship merchandise before charging the card. When customers see a transaction on their statement before merchandise is received, chargebacks occur.
- Use your easily recognized merchant name and company phone number as the “descriptor” that appears on customer credit card charges. This helps cardholders recognize transactions on their statements and makes it easy for them contact you, instead of their bank, with any questions or concerns.
A Better way for Everyone
Finally, it’s essential to be aware, and stay current, about the account provider’s specific account regulations concerning chargeback, returns and credits. Certain providers implement various chargeback protection schemes, and some high-risk accounts may be required to have that protection in place. If merchants take the time to investigate all of the options available to them, they will have a better outcome with regards to customer satisfaction.
There are things that can be done before, during and after the sale that will help reduce the incidence of chargebacks and returns. Over time, these procedures can so strengthen your company, at least against the most preventable chargebacks, that you will notice the difference in your income. Also, if you are particularly successful fighting the perils of chargebacks and associated merchant account losses, you may even qualify for a better discount rate. There are a lot of reasons to work on reducing chargebacks!