Did you know that a seller can sell a product or provide a service, and pay for it at the same time? You may think it is absurd but this is what happens when there is a chargeback.
Chargebacks occur when a customer disputes a transaction, and the credit card providers withdraw the funds from the seller to return to the customer’s account. And on top of that, it will also cost the seller a chargeback fee.
Protecting consumers from fraudulent transactions is one of the reasons chargeback occurs, but there are a number of other reasons besides it.
- Purchase was not remembered
- Item ordered was not received
- Billing was or seemed incorrect
- Item or service was misrepresented
Sellers may not always determine a fraud when it happens, but these other causes can be prevented.
1 Make sure payment descriptor is accurate
As stated above, there are times when customers dispute a transaction only because they do not remember buying from a shop’s name that appeared on their billing—the payment descriptor. This may be because some sellers use a mother company’s name or the shop’s previous name as payment descriptor that does not ring a bell to the customer.
It may be best to check if the payment descriptor is accurate so that an even like this can be prevented.
2. Practice best practices for any credit card transactions
There are two types of credit card transactions that need different precautionary measures:
- For card-present transactions done in-store, it is as simple as asking for an ID from the buyer to cross-check the name and signature on the credit card.
- For card-not-present transactions, enable address verification to match billing address from consumer to the record of the credit card’s company. Shoppers should also provide their credit card ID (CID) found on the credit card that is used to verify purchases.
3. Return to customers’ issues promptly
One of the most effective preventive measures to avoid chargebacks is to address customers’ concerns. Some of the reasons listed above can be solved if the sellers are willing to reach out and maybe make a replacement, or correct the misinformation. Most customers will be pleased that their issues matter to the seller.
4. Be clear with return policies
Make sure that return policy is posted is posted in every platform your business operates in. Whether that is in-store or online. Even on the products’ receipt, return policy must be early stated. Otherwise, the consumers have an advantage in a dispute and the credit card company is likely to side with the consumer.
5. Keep track every sale
Keeping track of every sale does not sound easy but in the digital age, point-of-sale systems and e-commerce platforms have long been around to do this task for you. Documenting items sold, product information, buyer information, payment details, and even delivery record can be used in verifying a charge.
6. Use a payment processor with fraud prevention features
People committing fraud have become very careful with their actions, making it hard to detect by a naive seller. That is where reputable payment processors come into the picture to help in advance verification monitoring and offer alternative dispute resolution processes.
Chargebacks can be very irksome to sellers, so knowing these preventive measures will greatly help businesses, especially start-ups and small businesses.