Have you ever had a customer try to reverse a transaction after they’ve already received their product or service? If so, you’ve experienced a chargeback.
Chargebacks occur when a cardholder files a complaint with their bank. The bank then contacts the merchant and requests a refund on the cardholder’s behalf. The bank will likely charge the merchant for the disputed amount plus a fee if the merchant doesn’t have enough documentation to prove the transaction was legitimate.
On average, Merchants lose $3.75 for every $1 lost to chargebacks. And here’s why the majority of chargebacks happen.
1. The Customer wasn’t Happy with the Purchase
It is challenging to avoid this reason for chargebacks. As a merchant, you can’t please everyone, and there will always be some customers who are unhappy with their purchases.
However, you may do a few things to reduce the likelihood of this happening. Make sure you have clear and accurate product descriptions, so customers know what they are purchasing. Provide exemplary customer service, so customers feel well taken care of. And be transparent about your prices, so customers don’t feel like they’re being tricked.
2. The Customer didn’t receive the Product they Ordered
This is a potential issue with online orders, especially if the customer is ordering from a different country. If the customer doesn’t receive their product, they may assume that it was never shipped and file a chargeback.
To avoid this, ensure you have a sound tracking system in place to provide proof to the customer that their product was shipped. And if you’re shipping internationally, be sure to use a reliable shipping service so that the customer may check the status of their purchase and know when to expect it.
3. The Customer was Charged too Much
This is another issue that may present itself with online orders. Sometimes, customers are charged more than expected, either because of hidden fees or exchange rates. If the customer feels like they were overcharged, they may file a chargeback.
To avoid this, be upfront about your prices, and include all relevant fees in the total. If you’re selling in a foreign currency, use a reputable exchange rate so the customer knows how much they’re being charged.
4. The Customer didn’t Receive good Customer Service
If the customer feels they weren’t treated well or their problem wasn’t resolved, they may file a chargeback. To avoid this, make sure you have excellent customer service elements built into your website so that your customer feels supported throughout their buyer journey. Respond to customer complaints quickly, and do everything you can to resolve the issue.
Wrapping Up
By taking these steps, merchants can help reduce the risk of chargebacks and their negative impact on their business. Chargebacks can be very costly for companies, so it’s essential to take steps to avoid them. Make sure your customers are clear on what they’re purchasing and that you deliver the product or service as described. If you’re selling online, consider using a service like First Atlantic Commerce (FAC) that offers buyer protection and can safeguard you from potential chargebacks.