If you’re in e-commerce, nothing can take the wind out of your sails like dealing with persistent chargebacks from credit card companies. Chargebacks are a form of consumer protection that means credit card companies have the power to go over your head to ensure customers get their money back if they determine that unfair or fraudulent transactions have happened. However, this necessary online protection can make accepting credit cards for small businesses a pain. In the worst case, customers can use this consumer protection structure to their advantage, a process called “Friendly Fraud.” You send the customer the product that they requested, its delivered fine, and yet they still request a chargeback, meaning you, the merchant, are left to pay for the “mistake”.
However, all chargebacks shouldn’t be viewed in this sinister light. Oftentimes simple misunderstandings are to blame; still, the last thing you want as a merchant is to create an environment where preventable mistakes continue to result in chargebacks. Here are some preventative measures to make sure you’re not putting your business in harm’s way.
The best general protection against chargebacks is great customer service. You want to avoid a situation where your customer feels like it’s too hard to reach out to you, and therefore that their only option is going over your head. Creating clear communication channels through email and phone will empower your customer to come to you with their complaint or issue, so that you can resolve it without credit card company involvement.
A great place to start if you want to protect yourself from chargebacks is to ensure that your catalog of products and services is accurate. This means that product descriptions on your website should be as detailed as possible. Additionally, extensive product photography of the highest quality will ensure that people know what they’re getting. This can minimize the desire for returns, which will in turn minimize your chances of chargebacks.
Customers are programmed to be wary of fraud. That’s why it’s important to use clear payment descriptors that are easy to recognize on your customer’s statement. You can even include a customer service number to the descriptor, so customers can reach out to you instead of going straight to the credit card company.
Duplicate transactions, such as those that happen when a customer hits the back button on their browser and resubmits the form, can put you at danger of chargebacks. Fortunately, Moolah provides the Authorize.Net payment gateway which can be set up to automatically block duplicate transactions, solving headaches for both you and your customer!
Lastly, put thought into your refund policy to make it clear, easy to understand, and fair. Nobody wants to make it easy to get a refund, but given the choice between solving the dispute yourself and suffering from a chargeback, it’s always preferable to keep the ball in your court, and make your customer happy yourself.
It’s unfortunate that chargebacks will probably remain a part of accepting credit cards for small businesses online. Still, by taking steps to clarify the transaction process as much as possible, you can ensure that you’re less exposed to friendly fraud, and that your customers feel comfortable coming to you first.