When a customer makes a purchase from you, they can pay using a credit card or debit card. If it’s a one-off purchase, the cash transfer takes place immediately, and the money arrives in your bank account within a day or three. If it’s a repeated expense (like a subscription), it might not be posted until the end of the billing cycle, usually end-month, or 28 days after initial purchase. Some networks will send cardholders a text or email every time your card is used to buy something, but most people only check their card statements once a month, when they’re repaying their card balance. It’s during this review process that most chargebacks are filed, and this is a look at the most common causes.
Because many customers wait a month before reviewing their statement, they might not remember a particular purchase. Other times, they know what they bought, but the name on their statement doesn’t match the name of their purchase. This could happen in a number of scenarios:
- They paid your business, but they see the name of your payment processor on their statement instead.
- They know the name of your web store or brand, so that’s what they expect to see. Instead, they find your legal name or the name of your holding company, which is a name they’ve never heard before.
- They bought a specific product e.g. a red brush, but see only a purchase code with no further details about the purchase (and perhaps also no easy way to contact you), so they don’t know what it is.
One way to avoid these scenarios by issuing clear receipts that tell the customer exactly how the charge will appear on their credit card statement, and which contains the name of your payment processor, your web store or brand, your business name / holding company, and a description plus photo of the exact item then bought. This makes all the involved parties familiar to your buyer. Where possible, adjust your business documents so all names are synchronised and aligned.
There are multiple scenarios where your customer may be unhappy enough to want their money back. Their package may arrive late, or it might not be what they expected. Or maybe they simply changed their minds and don’t want it anymore. For the customer, they may feel that the easiest option is to call the back and cancel their purchase. Meanwhile, you’re stuck with chargeback fees and permanent smudges on your record.
To avoid this, make it easier for customers to contact you than to deal with their credit card company. From the start, have a clear policy on refunds and escalation. Display it prominently on your web store, and remind people of it before they finalize their purchase, and include it on receipts. Even if your return policy is “no returns,” it can still help reduce chargebacks to make that clear to the customer, because many honest customers will stand by that policy if they were aware of it at the time, and they know they agreed to it, and because they may realize that this can prevent their chargeback from being successful. More importantly, make your phone number available and keep your phone lines open so they can reach you at all times, and be polite and professional in how you talk to unhappy clients. Tracking numbers help too.
For more information on common reasons for chargebacks, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.