E-commerce merchants face various threats daily; some of them are trivial, some of them are not, but all of them are equally frustrating. One of the common issues sellers encounter online is chargeback operations. These reversed transactions can negatively affect the company’s budget, slowing its growth significantly. Preventing these transactions is crucial, and we know how. In this article, we explain why it is vital to protect your business from chargebacks and give you practical advice on how to prevent chargebacks and secure your assets.
Chargeback Protection: Why Is It Important?
Chargeback operations are reversed transactions the bank issues at the client’s request. Such refund transactions are issued without the seller’s knowledge. Usually, once the bank approves the chargeback request, there is nothing the merchant can do: money gets transferred back to the customer’s account, meaning the seller loses money for a certain purchase.
Losing income is unpleasant; however, that’s not the only issue the merchants must deal with after chargebacks occur. The chargeback transaction might cause several other issues simultaneously. The list of problems includes:
- Penalty fees. When a chargeback occurs, the bank charges the merchant’s company for the reversed transaction. Not only does the merchant lose revenue for the purchase, but also pays an additional penalty fee.
- Increased processing fees. A high number of chargebacks might lead your payment processor to increase processing fees for all transactions within the company, leading to bigger monetary losses.
- Lack of customers. Many chargebacks can negatively influence your rate as a merchant. Striving to receive quality services, potential clients might avoid your business, contacting more seemingly-reliable sellers instead.
- Limited partnership opportunities. Reputation, damaged by chargebacks, can become a serious obstacle in creating strategic alliances. Deeming your establishment untrustworthy, many companies might refuse to partner, slowing the progress of your business.
These issues can become severe drawbacks to your company’s progress. That’s why it is crucial to build a strong defense system against chargeback transactions and apply different strategies to minimize their chances of occurrence.
The Best Chargeback-Prevention Strategies
Preventing chargebacks is extremely important, but not everyone knows how. Here, we give a list of efficient tactics one can implement immediately to successfully eradicate the chargeback issue within the company.
Invest in Chargeback-Prevention Tools
Taking care of chargebacks yourself might be difficult. Fortunately, there are tools that can resolve disputes automatically, saving you a lot of time. Invest in chargeback prevention instruments like Verifi or Ethoca to receive alerts about chargebacks and gain insights on fraudulent activity to protect your assets more efficiently.
State Your Policies Clearly
Many customers issue chargebacks that go against the company’s refund policies, resulting in illegitimate reversed transactions. To avoid this issue, state your business policies clearly. Create a separate page of rules, where terms are explained in simple language, and the most crucial pieces of information are highlighted. To minimize confusion, you can also add a link to your policies on the checkout page.
Support Communication
Some customers issue chargebacks when they don’t receive proper customer service. You can easily prevent such chargebacks by talking to your clients. Respond to their requests quickly and help them find simple and efficient solutions to avoid chargebacks and raise overall satisfaction with your company’s work.
Implement Tracking System
Lost parcels and delayed shipments might often result in refund disputes. To avoid such chargebacks, you can implement tracking services. This way, clients will know when to expect their order and where it could’ve been lost. Additionally, a tracking system might help win fraudulent chargeback requests.
Remember that by applying these tactics, you ensure the stable growth of your company and better protection of your assets. Do not hesitate — implement chargeback prevention tactics today to save your time and money in the future.
Final Thoughts
Chargebacks are a frustrating issue merchants encounter regularly. Fortunately, there are efficient tactics that can help sellers minimize the number of chargebacks and simultaneously improve customer service. Analyze your chargeback data frequently to determine weak spots in your defense system and eradicate them to avoid issues in the future.