Chargeback fees may only be a few cents, or maybe a few dollars, but they pile up pretty fast, and their long term consequences are disastrous. It stays in your permanent bank records, even if the matter is resolved in your favor. If you accrue too many chargebacks, this could trigger an audit or even the suspension of your merchant account.
Chargeback vs refund
From a customer perspective, they just want their money back. They don’t particularly care how it happens, and they might think it’ll be easier to ask their bank instead of talking to whoever they bought the product / service from. This is actually a false assumption, because a chargeback can take weeks or even months to process, while a business-initiated refund could literally take minutes. That’s the first step – make it obvious that you’re open to refunds. Put a highly visible refund policy on all your collateral – website, emails, receipts, texts, everything. That way, customers know they don’t have to take it to the bank.
Support your refund policy by walking the talk. Make it effortless for customers to reach you. Offer multiple communication channels – phone, email, social media accounts – and make sure they’re all responsive. Customer queries and complaints – whether they regard refunds or anything else – should be answered promptly before customers grow concerned. Respond before they put you on social media blast. If they do, you’ll have a lot more to worry about than chargeback fees.
When a customer makes an order, email them a comprehensive receipt. It should have a tracking number, a picture of the package, a description of what they bought, expected due dates, and all brand names involved. This especially applies if the customer paid indirectly.
Most importantly, the receipt should let them know how the charge will appear on their credit card statement, especially if that is different form what your customer might be expecting. That way, when they later review their credit card statement and see that name, they won’t be alarmed and cancel the transaction.
For more information on reducing your risk of getting a credit card chargeback, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.