The Commerce business has experienced a lot of adaptations since its beginnings, and its digital transformation to e-commerce is the latest. More and more stores are transferring their business operations online, especially after the pandemic changed our lives. Even the business with no internet presence had to adapt and accept the transformation sooner than they expected it to happen. But, the companies that jumped into the change and those forced to it experienced the same benefits. No longer restricted by their location, they could finally reach customers from all around the world. It even made the difference for some shops between staying in business and closing their business altogether.
Even though digital transformation might be a new concept for some shops, chargebacks are not. While they have been present for decades already, the unexpected growth of eCommerce has also seen an increase in the number of chargeback cases. These can cause various problems for merchants, from financial to reputational ones. According to SEON’s guide on chargeback management, you need to keep your chargeback rate under 1% of all processed transactions. If the rate goes higher than that, you could be classified as high risk, your card transaction fee could increase, your account closed, or you could end up blacklisted by card networks. It is time for all merchants to start taking active steps in managing chargebacks and protecting their business.
How can you protect your business from chargebacks?
Chargebacks can happen for various reasons, from customers not recognizing the transaction on their bank statements to their card being stolen and used for fraudulent purchases. Regardless of the reasoning, the result is always damage to the merchant. It is up to them to start being proactive and take active measures in preventing chargeback from affecting them.
1. Be accurate and specific
Many chargebacks happen because the product didn’t meet customers’ expectations or they misunderstood the return policy. Merchants can prevent that by being more accurate and specific in all aspects of interaction with customers.
Product description: It can’t be misleading as customers need to know what you offer. Make sure your product description is accurate, clear, and easy to understand to ensure it will meet their expectations. For best results, you should include dimensions and photos showing items from different angles if possible.
Return policy: You need to clearly indicate the requirements for the customers when they are returning the product. Try to keep it simple but as detailed as possible to avoid misunderstandings. Details of the return policy should always be available on the checkout page and included in the package with the item sent to the customer.
Merchant descriptor: Sometimes, customers will request chargeback because they haven’t recognized the transaction on their bank statement. This happens because the merchants haven’t ensured their descriptor matches the name of their business. Luckily, you can remedy this quickly.
2. Ask for a CVV number
This needs to be utilized during every transaction to prevent various types of fraud like an account takeover, identity theft, or card-not-present fraud that result in a chargeback. It will increase your chances of dealing with a legitimate card owner with a physical card present in front of them.
3. Implement cybersecurity tools
By utilizing cybersecurity tools like antivirus programs or data enrichment and device fingerprinting, you can stop fraud attempts before they can do any severe damage.
4. Be accessible to your customers
By being there for your customers, you can prevent various chargeback requests. According Forbes, if your customers can contact you as soon as the problem arises, you can fix it before it escalates into a chargeback request. Your contact details need to be visible and easy to find.
Chargeback will always be present in the eCommerce world, but by following these steps you can effectively manage them.
