Cashless payment is what every customer prefers nowadays. Although these methods of accepting cashless payments have provided security to both; customer as well as merchants, there are some challenges that are faced by the merchant and one of them is chargebacks. Whether a merchant accepts payment through mobile or online, avoiding or nullifying chargeback is not that easy task. Even if you avail chargeback management services like chargeback alert services or chargeback prevention services, chargebacks occur. On filing a chargeback, the customer is reimbursed immediately and then it is merchant’s decision whether to fight it or not.
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It is impossible for a merchant to stop the customer from filing a chargeback but there are ways to limit the chances of the chargeback. Few of the steps that a merchant should follow in order to minimize the chances of chargebacks are listed below. Let’s discuss them one by one in detail-
- Choice of Brand and Descriptor Name
Choose the name for your business wisely that would go on the credit card descriptor. 30% of the chargebacks are filed because the customer is unable to recognize the charge. The descriptor is shown on the customer’s credit card bill or statement and if the customer does not reorganize it, he may file chargeback out of confusion.
Let us take an example for better understanding. Let’s say the legal name of your business is ‘XYZ’ but you are branding your website with a different name, let assume it to be ‘ABC’. Now, most of your customers recognize your business with the name you use for branding, in this case, ABC. As the name displayed on the credit card statement will be XYZ, the customer might not recognize it and out of confusion might file a chargeback.
It is better to use a legal name as descriptor name to avoid such confusion because even if you have displayed your business legal name on your website, there are chances that the customer will go with the branding name.
- Always be Available
When a customer does not recognize a charge and wants a refund, he has two options:
i. File chargeback
ii. Ask for a refund from the merchant
There are customers who like to do research before filing a chargeback. The merchant should provide customers with a contact number and an e-mail id where they can reach the merchant when needed. Be available at all times and respond to the customer ASAP! It is a good practice to attend customers and listen to their queries, especially for new merchants
- Detailed Information
Provide your customers with a detailed description of the products that you are selling online so that the customer can have a clearer picture of what to expect. A description may include following details:
- Picture of the product
- Size (dimension)
- What all is included
- Features & functions
- Free trails (without hidden cost)
Most of the businesses practice entering credit card details of the customer when offering a free trial so that it can be used to enroll customer with a recurring payment right away. Don’t cheat your customer. Provide a free trial first and at the end of it give them an option to opt-in for payment plans if they want to continue buying the product. There is a 50-50 ratio that customer will enroll right away. This might not seem appealing to most of the merchants but adopting such a method might lessen the chargeback ratio.
- No False Promises
When a merchant is starting a new venture or is trying to increase his sales, he tends to give mouth-watering offers to attract more customers, such as lifetime membership or low-cost membership, limited period offer or free services. This seems a good idea but it is difficult to maintain or provide such offers for long and failed to do so will open doors for large number chargebacks.
For example, if you wish to change the services you provide or want to move to a completely new direction or want to shut down your business, you might have to face a huge number of chargebacks.
- Offer Refund
The best way to reduce chargebacks is to provide a refund to the customers right away. If your customer is not happy with a particular product or service, it is better to provide a refund to retain the customer. In this way, you will gain the confidence of the customer and would not have to waste time and resources over chargebacks.
- Choice of Brand and Descriptor Name