When a credit card transaction is disputed for any reason, a chargeback will be issued. These chargebacks typically happen due to many reasons including price disputes, poor service received, receiving the wrong goods, customer dissatisfaction, and more.
At the end of the day, the chargeback process was specifically created to help boost customer confidence, since they make it so easy for credit card holders to dispute charges. Banks and merchants then have to spend their valuable time discovering if a transaction is real or fake.
As a business owner, chargebacks are not only a hassle; they can often become quite costly to your bottom line. Two specific things typically happen when a chargeback is initiated:
- Payment is withheld from the merchant’s acquiring bank until the matter is resolved.
- Credit card processors and banks charge costly fees that the merchant has to pay even if they win the dispute.
As you can see, doing everything in your power as a merchant to prevent chargebacks will help protect and preserve company profits. Our overall aim today is to share five ways to prevent chargebacks. This way you can save and avoid costly fees as much as possible.
5 Chargeback Prevention Tips
- Respond quickly to chargeback requests – if a request were ever to go through, you need to immediately respond to it and retrieval requests as quickly as possible. If you, as the merchant, do not respond within the allotted time, the bank will immediately process the request and there will be nothing that you can do about it. By responding in the allotted time, or even quicker to stay on the safe side, you’ll prevent the bank from pushing through the request before you have the opportunity to inquire about the situation further.
- Make customer service a top priority – sometimes chargebacks happen because customers are unhappy with the service that they have received. In an effort to prevent disputes due to poor service, having a top-notch customer service staff available to help your customers can prevent problems that could easily be avoided. Make it simple for customers to get the help that they need to answer their questions and concerns.
- Post your return policy clearly and make it well-known – disputes often happen because customers do not clearly understand the return policy. If they attempt to return a product and find out that the time to return has already passed, they will often put in the dispute with their credit card company and make it appear that it is the business’s fault. Clear return policies that are posted for everyone to see will prevent chargebacks of this nature.
- Customer communication – clear communication with customers is the perfect way to prevent disputes. If they are aware of the status of their order and receive regular updates, disputes are much less likely to happen.
- Employ debt recovery services – by hiring a debt recovery agency, you can spare your company the hassle, frustration, and time needed to recover chargeback funds. Instead of letting chargebacks ruin your profits, let the professionals recover chargeback funds on your behalf when it seems that the customer wasn’t a victim of fraud or identity theft.
Use this information to prevent chargebacks now and in the future.