This, as you can probably guess, is one of the most frustrating things that can happen to you as a merchant. Not only do you lose out on a sale, but you also have to pay a chargeback fee on top of that to your merchant processing company — the average cost of which can range from up to $15 to $100 per transaction. Now, unfortunately, these things just happen. They’re inevitable, and it’s impossible to fully protect yourself from ever being charged back on a sale.
However, that doesn’t mean that you can’t reduce the number of chargebacks that you have to deal with! Continue reading to learn more:
CHARGEBACKS 101 — The Basics
Before we tell you all the things that you can do to protect yourself from chargebacks, let’s first break down the basic question: Why do chargebacks happen?
Well, the first thing that you probably think of are chargebacks as a result of identity theft. As in, a purchase was made on your customer’s credit card account that they didn’t actually make. However, that’s not the only reason why a customer may dispute their charges, they might also bring up disputes if they:
- Did not receive the item that they ordered
- Believe the product/service didn’t match the description you provided
- Wanted to test out a product/service before committing to a purchase
- Don’t recognize the charges on their account
- Were incorrectly billed
And the kicker is. If their credit card issuer has even the slightest bit of reason to believe that their claims are true, you will be charged back. Mostly because it is in their best interest to keep their cardholders happy. Which doesn’t leave much protection for you. Hence, why we’ll be breaking down all the things that you can do to reduce the risk of chargebacks below:
HOW TO PROTECT YOURSELF FROM CHARGEBACKS
1. Partner with a SOLID Merchant Processor!
As a merchant, you’re probably already familiar with your Merchant Processor. But, it’s best to strive for more than that, you need to know them very well, for they are your partners in this!
In fact, according to the CEO of Platinum Payment Systems (PlatPay), Jed Morley, their goal as a merchant processor is simply to “…help our clients solve their payment processing problems.” Meaning that, just like how card issuers have their customers’ interests in mind, merchant processors have their clients’ best interests in mind as well.
And so, simply by choosing to partner with a solid merchant processor, ones like Platinum Payment Systems, which provides added chargeback and fraud protection, you’re already well on your way to reducing your risk of chargebacks.
2. Communicate with Your Customers!
Customers are the biggest deciding factor when it comes to preventing chargebacks.
They’re the ones that open the dispute and they’re the ones given the burden to prove that they are in the right. It is your duty then, to make sure that that burden is as heavy as possible.
This can be done simply by being clearer with your product/service descriptions. As that will prevent a lot of the ‘item does not match description’ chargebacks filed. When applicable, you can also have your customers sign a contract that dictates, exactly, what kind of services your business provides, as this will allow you to contest their claims more easily.
But really, the main thing you should focus on is the quality of your customer service. Just, listen to your customers. Most credit card processors, like Platinum Payment Systems, are there to support you in this, as they will notify you any time a chargeback has been filed. At which point, if you haven’t already, you should address the issue promptly by getting into contact with your customer to see if you can head off any of their discontents and get the sale back on track.
3. Hire Some Experts!
If your business is really struggling when it comes to chargebacks, and you’re losing a significant amount of revenue because of it, then it’s perhaps time to cut your losses and hire in some extra help. There are chargeback management companies available for this very reason. Of course, you will have to weigh in their own fees, which will not be cheap, but as a service provider that deals with chargebacks regularly, they will know what to do!
To make things even simpler, there are merchant processors like Platinum Payment Systems who are partners with highly reputable chargeback management companies. So, if you ever fall under PlatPay’s purview as a customer, they can set you up with these services if needed.
The Bottom Line: How to Protect Yourself from Chargebacks
Chargebacks are definitely frustrating to deal with, but if you build up some solid foundational support, either by choosing a reputable processor like Platinum Payment Systems, training up your customer service team, or even hiring chargeback management services, they can be dealt with! It just takes a little bit of extra effort in the beginning.
