How to Avoid Chargebacks
A chargeback can be defined as “the process of taking back funds for a particular product or service from a merchant’s account after the money has been paid to the merchant”. Normally, chargebacks occur due to reasons such as customer dissatisfaction, fraud or fraud prevention, authorization issues and processing errors.
For whatever reason, the end result is that the customer now has both the product and his payment restored to him, leaving the merchant with nothing and if that’s not enough, an additional chargeback fee for his ‘troubles’.
As it is unrealistic to expect chargebacks to never occur, one can take appropriate steps to ensure that as many of these transactions as possible can be avoided:
1. As soon as you receive a payment for selling a product, provide the customer with the complete details of the transaction which will serve as reminder so that he will not ask for a refund just in case he/ she has forgotten about it.
2. If a customer requests for a refund and contacts you first, issue a refund immediately after asking for the reason why or else you can expect a chargeback issued from the issuer bank shortly. Not only will you lose the customer but will have lost the money as well.
3. Thirdly, if a customer is dissatisfied, then it is better that you do refund their money without trying to sell them anything else in order to avoid chargebacks.
4. In the case of fraud, it is a good idea to ask for assistance in checking the credit of customers, and if you suspect theft, you can ask the customer for a copy of his credit card receipt which can be sent to the bank for verification. This is another way you can avoid chargebacks as well.