One of the side effects of the Covid-19 crisis in the eCommerce sector, and predominately in the travel industry and its related segments, is chargebacks. Chargebacks on credit and debit cards can be some of the most frustrating experiences you have to go through as a merchant. You’ve made a sale and accounted for the revenue, only to be forced to return the money and pay a chargeback fee on top. It also damages your relationship with your bank and your processing company. While some returns are inevitable, you can take steps to reduce chargebacks for your business.
1. Post Your Return Policies
Whether you are operating in-store, online, or both, a written return policy is your best friend. It gives your customers notice that you place limits on how and when they may return items. In addition, it allows you to point to that policy if someone attempts to process a return outside of your terms. This simple step can protect you from having to process a return-based chargeback weeks, or even months, after the customer made his or her initial purchase.
2. Clearly Describe Purchases
When you process a payment, make sure you include a product description with the receipt. The clearer and more precise that description is, the more easily a customer can recall the charge later. A vague description leaves you vulnerable to customers claiming no memory of receiving the product or service you provided. By detailing what your customers buy, you protect yourself from this kind of friendly fraud.
3. Maintain Records
The purchase description is only half of the equation. The more carefully you maintain your own records for purchase history, shipments, and inventory, the more thoroughly you can protect yourself from chargeback demands. You should also retain records on the chain of custody, so you can track where a product was at every step, from inventory to delivery. Stay on top of your business records to limit the number of chargebacks you are left unable to dispute.
4. Follow Protocols
Having a plan to prevent credit card fraud only helps if you follow it. Your processing company will set guidelines such as checking CVV codes, confirming signatures, and confirming matching information on card-not-present transactions. You should also have internal policies designed to confirm the identity of your customers who use cards for payment. Do not treat any of these as optional, even when doing so would save time.
5. Be Proactive on Fraud Detection
Invest in a processing provider or outside service that can identify suspicious payment patterns in your business. While you cannot catch every instance of a fraudulent payment made to your business, you have no excuse not to at least try to do so. Sophisticated tools are now available that can flag activity that might otherwise slip past your attention. If you identify these patterns right away, it can save enormous headaches later. Visa Merchant Purchase Inquiry is a perfect example. It enables signed-up merchants the ability to respond to cardholder inquiries around unrecognised transactions (and other dispute categories) PRIOR to a chargeback/dispute by providing relevant supplemental merchant information, in near enough real-time.
No business will ever eradicate chargebacks completely. Even so, you should take every step you can to minimise the problem. Every chargeback you avoid is a positive step for your bottom line and your business relationships. Should you feel you need to lower chargebacks or improve the fraud management system in your business, contact me today. The risk management team of SafeCharge and I are ready to listen, and provide solutions to your specific issues.
About the author: