How to Reduce Chargebacks

Credit cards offer customers a quick and easy way to pay for goods and services. If you’ve ever searched your pockets for cash and can’t quite remember what you spent it on, then you’ll understand why some consumers love the transparency of credit cards. At any time, they can check their card statement and know exactly how much they spent, where they spent it, and what they spent it on.

If any item on their card statement looks unfamiliar or suspicious, they can alert your bank and demand a refund. The recipient will have the funds deducted from their merchant account. The merchant is also charged a fee for reversing the erroneous transaction. As a business, these chargebacks can pile up, and if you get too many, your business could lose its merchant account. So how do you avoid these charges?

  1. Identify yourself clearly

Many businesses are backed by holding companies or have other corporate structures. That means the name on the shop sign isn’t the name in the bank account. If – for example – a customer buys from Cozy Candy but gets a bill from Confectionery Center, they may think it’s a mistake and request a chargeback. On your customers card statements, make sure you use a name that the customer will recognise. This is why when you open a merchant account, it’s very important to make sure that your company’s name appears on your customers’ statements, and not the name of your merchant account provider.  At a minimum, it is a good idea to make sure to tell your customers how the charge will appear on their statements, and hope that it rings a bell later.

  1. Include a lot of detail

Go a step further and include as much information as possible on the transaction. The customer will generally always see the date, amount, and merchant name. But why take the chance that this might not be enough. Wherever possible, include the website where they made the purchase and a description of what the customer purchased.

  1. Issue clear receipts

Chargebacks often arise from online transactions. As part of their online purchase, the client will have given you their email address. Email them a detailed receipt with screenshots and product imagery where applicable. You can also include the brand name and the holding company name, as mentioned before. This way, even if they forgot the transaction, they can look through their emails and see that it’s a valid purchase.

Be careful though. Never use customer emails for marketing items like newsletters unless the customer gave their explicit permission. Spamming may seem like a cheap way to advertise. However, it erodes customer trust and is eventually bad for business. Plus, if enough customers complain that you are sending spam, then email services may automatically classify you as spammer, which can cut you off even from email communications relating to actual inquiries from legitimate customers–which can eventually lead to more chargebacks, when you are unable to respond to those customers.

For more information on reducing chargebacks, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.

 

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