Credit Card Chargeback- Troublesome For Businesses
Credit card chargeback is always troublesome for business. Though it is a protection tool for consumers but for merchants, it’s a frustrating threat for their business. Sometimes due to overutilized chargeback protection by the customers, the business loses their profitability. For businesses no matter small or big, a chargeback is always painful. And Even it doesn’t matter where your business is, a Credit Card Chargeback in Singapore, USA, Canada, EU or wherever you need to protect your business with it. Being loyal to your business, you have to find ways to fight with the chargebacks. In this article, we try to help merchants to follow the guide to prevent chargeback, and we even have special services for those merchants with huge chargeback ratios. Our Chargeback Alert service not only helps to reduce chargeback but also improves sales. Stay connected with us to know the pitfalls of chargeback to your business and how to fight against it.
What Is A Credit Card Chargeback?
A credit card chargeback is a customer protection tool that helps a customer to ask their money back from the merchant. The customer raises a dispute against the product and service to get a refund or chargeback. The refund and chargeback are not the same things but are often used interchangeably. When a customer approaches the merchants directly via customer support or chats support, they ask for a refund by explaining their issue with the product. The customer is then obligated to return the product whatever was purchased. This is the case of a refund when the consumer directly approaches the merchant and gets his money back. There are cases when instead of directly approaching the merchant for a refund, the customer has the option to raise a dispute with the card issuer bank. Now the card issuer bank helps the customer to get the chargeback.
Reasons For Credit Card Chargeback
There may be several reasons for a chargeback, and though it is a customer right, they can dispute a chargeback for any reasons. Sometimes the reason is valid, and maybe sometimes they are taking advantage of a merchant. Anyways, let’s talk about the most common reasons for a credit card chargeback.
- Product Or Service Undelivered: The most common reason for the chargeback is the non-delivery of products or service for which the customers have already paid.
- Unsatisfactory Product Or Service: The other reason may be unsatisfactory for the product or service they received. Both cases are friendly fraud.
- Credit Card Fraud: What if the purchase made is not by the cardholder. This was the case of credit card fraud when the purchase was made by stolen card and the legitimate cardholder when notified raises the chargeback.
Follow Seven Steps To Fight With Credit Card Chargeback
- Investigate the reason for a chargeback: The very first step is to investigate and analyze the reasons for a chargeback. Prepare a report for the major reasons for the chargeback and make a strategy to mitigate it. The reasons might be that the customer didn’t receive the product, or the product delivered does not meet the customer’s expectations. There may be reasons that they didn’t understand your return policy or even they are not able to recognize your store or purchase made in their credit card statement. There may be a lot of other reasons for the chargeback, dig deep to understand those. The more you understand, the better you fight against chargeback.
- Select a payment processor that helps in fraud detection: Most of your problems get resolved if you choose the right processor. Your processor may help you in many aspects. With the technology, the payment processors also come up with a lot of features to protect merchants against a fraudulent chargeback, online threat and preventive feature that could help a merchant to a large extent. So, it’s important to choose your merchant service provider wisely.
- Payment Descriptor Should be the same as your Store Name: Unrecognized payment descriptors are also the reason for a chargeback. A payment descriptor is how your customer sees you in his credit statement report. If your business information is not recognized by the customers, there may be a chance that the customer raises a dispute against you. If your payment descriptor is not accurate, ask your payment processor to do the needful for you.
- Verify your Customer before they purchase: Know your customer before every purchase. Verify the customer identity through a 2FA or other methods. And don’t forget to send an email immediately after the purchase has been made. It could help you to notify the cardholder about the purchase and ensure that the receipt you send must have product description, date and time and most importantly the price.
- Never forget to respond to any customer’s issues or if needed contact them directly: If you are contacting your customer immediately after an issue or complaint has been recorded, it shows your concern towards your customer. Many times it is found that most of the issues get resolved with effective communication. So, it’s necessary to care about your customer and get in touch with them to solve their complaint. In fact, customer service always has a great impact directly to the business.
- Return or Refund Policy Should Be Clearly Mention: Either you are using a retail shop or a web store, clearly defines your refund or return policy to your customer.
- Apply for Chargeback Protection Service: To fight like a pro, it is recommended for every merchant to have a chargeback alert service. It is an automated service which helps the business to fight with chargeback like a pro. Though it is a paid service, however paying a little to save more makes sense.
Chargeback Related FAQ
- What Is A Chargeback? A chargeback is a reversal of money. It is when a merchant charges his customer for the product or service he offered. Later, when the customer wasn’t satisfied with the product, raises a dispute with the acquiring bank to get a chargeback.
- What Is Dispute And Why A Customer Raises It? A customer dispute is a disagreement against the merchant’s service. A customer may raise disputes, usually in two cases. Firstly, if the payment is made by the cardholder but later he is not satisfied with the product. Or secondly, if the customer is unaware about the purchase made and when he gets notified, he raises a dispute.
- What Is The Role Of Issuing Bank In Chargeback? The issuing bank is a financial institution that issues a credit card to the customers. In case when a customer wants the refund for the product made via credit card, he either approaches the merchant for the refund or acquires the bank for the chargeback.
- What Is The Time Limit A Customer File A Chargeback? Usually, a customer can raise a chargeback within 120 days after the purchase has been made through a credit card. Note that the limit is set by the issuing bank and is different for different chargeback reason codes.
- How To Get A Chargeback Alert Service? The procedure is simple and easy. You have to approach a payment processor and ask for Fraud prevention features or Seller protection features.
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