Many businesses incur a great deal of risk when they accept credit cards as payment. Credit card chargebacks can create a lot of unpleasant and expensive work for your business. With the massive influx in online purchases, the occurrence of chargebacks is higher than ever. It can be hard to protect yourself from this problem, but there are some tips you can apply to reduce the risk of chargebacks. Keep reading to learn efficient ways to protect your business from credit card chargebacks.
What Are Credit Card Chargebacks?
Chargebacks are a form of financial transaction. A customer disputes a credit card purchase, and the credit card company reverses the transactions. The reason for reporting the chargeback can vary. It could be that the transaction did not go as planned, like if you shipped an item, but it never reached them.
Another reason could be that they claim they never made the purchase in the first place. Some of these issues can be prevented by chargeback protection solutions. However, even with these solutions, there are some instances that cannot be prevented easily. In those cases, your business should establish some chargeback prevention measures to protect itself from this very common fraud.
Why Chargebacks Create Risk?
The most obvious reason to prevent chargebacks is the cost – both monetary and time-related. A chargeback requires more work on your part, as well as some fees deducted from your business.
The most obvious risk from credit card chargebacks is the cost involved in handling them. When you are able to realize you have a chargeback problem, it is important to follow through with a resolution as quickly as possible. You don’t want to leave it open-ended because that makes it more likely for another customer to be refunded as well.
The longer a chargeback dispute goes on, the higher the likelihood that multiple refunds will occur and the less likely they will be able to be recovered from your customers later on down the line.
How To Protect Your Business Against Chargebacks
The best way to prevent chargebacks is to make sure the sale is legitimate in the first place. Chargeback protection solutions can help you do just that by providing an extra check between your customers and the credit card companies. However, there are 4 other steps you can take as well.
1. Record Your Transactions
One of the most important steps in protecting your business from chargebacks is recording your transactions properly. Takedown every detail of each sale you handle – name, address, date, time, and a description of the purchase or product purchased. Anything else you may need, such as a tracking number or a customer service number, should be recorded too so that there are no question marks later on down the line.
2. Provide Exceptional Customer Service
One of the most overlooked methods for protecting yourself from credit card chargebacks is providing outstanding customer service with your products and services. This step is essential because outstanding customer service can often prevent the chargeback in the first place.
If you have excellent customer service and a chargeback prevention method, you can spot someone who will likely file a chargeback in the future. That allows you to take appropriate precautions before they actually do it. Poor customer service gives no option but to deal with an angry person who just lost all their money on your product or service, driving them to act out by filing a chargeback.
3. Implement Chargeback Protection Solutions
One more step to protect your business from chargebacks is to implement some sort of chargeback protection solution. There are a variety of solutions available, so find which one works best for your business. For example, many businesses already use a service to decrease chargebacks you can find here at Chargebackhit.com. If you want to develop your business and don’t want to get involved in the details, you can subscribe to this service with everything taken care of for you.
This will save you the headache of handling chargebacks or worrying about every little thing that goes on with the transaction. Although this option is more costly upfront than other options, it can be easily recovered in the long run with lower fees and less work required on your part.
4. Honor Disputes
Credit card companies are not infallible, so there will always be disputes that can arise between you and them. If these disputes occur, it is important to honor your customers’ requests. This means to take what they are saying seriously and act accordingly.
If a dispute occurs, treat it as if it were an actual loss on your part, as this could potentially lead to a chargeback. It is important to recognize situations in which you should honor a dispute or who should be made aware of the problem.
The Bottom Line
Chargeback prevention is important for your business to keep from the potential risk of chargebacks. When all is said and done, the best way to prevent chargebacks is to have great customer service, a reliable payment method, and chargeback protection solutions. But in the end, you have to make your own decision based on what you feel will work best for your business.
Chargeback solutions can be used in different industries and come in many forms. For example, there are market-specific solutions customized specifically for that industry. Therefore, it pays to find which type of solution works best for your needs since those options will be more customized than general ones.