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How can I minimize the risk of chargebacks?

It is important to anticipate the factors that might trigger chargebacks from the customer's perspective. Often times, the merchant checks the reason code of the transaction to understand the reason for the chargeback, but there may be factors that are not reflected in the reason code, such as the product was not what was expected, the customer couldn't find a contact email to request a refund, or many other reasons that could have triggered such an expensive and difficult transaction. Normally, a bit of attention on improving the descriptions of your products or services and supplying clear information and contact details goes a long way towards helping you avoid chargebacks.

Use a clear descriptor

The descriptor is what the credit card holder will see on his bank statement. If a customer doesn't recognise the name of your business, they will request a chargeback. A familiar name, or alternatively, a well documented name, will minimise the possibility of chargebacks. Make it clear for the customer what he will see on his or her statement. We recommend using the URL of the business instead of the legal name, as this will be easier for the customer to identify. If you have a complex network of online shops, a clear descriptive page explaining the products or sites and showing the relation between them will help as well.

Be ready to answer customers' queries

It is important to have clear contact information as well as to answer any customer queries in a timely manner, as the customer won't wait too long before requesting the chargeback. A prompt response to the customer means that he or she will try to resolve the issue with you first.

It's always good business practice to listen and address a customer's concerns and problems. Good customer services goes a long way towards creating fidelity and concretizing a sale.

Notifications and updating the customer with progress tracking is also good practice, as it keeps him or her informed, and shows that you care.

Consider refunds

If the customer is unhappy with the service or product, it's best to offer a refund. An unhappy customer will try to get his money back one way or another, and requesting a chargeback from his or her bank is not a difficult process.

Chargebacks are heavily balanced in favour of the customer; this makes it hard to dispute a chargeback. Chargebacks are expensive and require time and attention to handle. It is best to avoid this scenario altogether.

Offering clear information about refunds will naturally be the first and easiest way for a customer to request his or her money back.

Avoid having hidden costs

Charging a customer with costs that are not clear before they accept the service or product increments the likelihood that they will request a refund or a chargeback. For memberships and recurring billing, if you take their credit card info during the trial period, make sure the customer is happy to continue with the subscription after the trial period, otherwise they might forget and request a refund or a chargeback after the first payment.

Terms and Conditions

Clear and visible terms and conditions are a must for any online shopping. Besides the legal implications, information about returns, information about refunds, and your contact information should always be clearly displayed.

Product delivery receipt or Service records

If you deliver a product, please note that many merchants opt for a delivery option where the customer has to sign upon receiving the product. This helps prevent complaints about not receiving the product.

If what you offer is either a product or a service, it is good to keep a record of the dates of the transactions, amounts, conditions accepted, delivery information, etc.

Clear information on Payment Page

The payment page is an important part of the user experience, and information such as the sale amount, which product is being sold etc., should be clearly displayed.

Before they arrive at the payment page is a good moment to show your customers all the information they need; the more details, the better. Services should be clearly described to answer customer expectations, and products should have dimensions, weight, installation instructions and warranty information, etc.

Use 3D Secure to your advantage

Please see the related article link below to know more about 3D Secure and how it can help you minimize the risk of chargebacks.

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