Your target in the eCommerce market is to sell your goods to consumers so that you can be compensated. However, it is not always that easy. Chargebacks can transform otherwise straightforward business deals into time-consuming lawsuits with chargeback costs that can quickly add up.
How to reduce your credit card chargebacks?
By comprehending how credit card chargebacks operate allows the company to simplify credit card collection and reduce chargebacks.
Types of Credit Card Chargebacks
Chargebacks on credit cards are reversals of credit card charges made by buyers and executed by the credit card provider or bank. A chargeback happens when a person calls their bank or credit card provider and demands that money paid on a transaction be credited to them for some purpose.
Credit card chargebacks were initially designed to shield users from theft, but that isn't always the reason why chargebacks happen. While the purchaser may be a victim of fraud, in other situations, even though the transaction was genuine, customers request a chargeback with their bank or card provider.
Credit card chargebacks are classified into various types:
Credit Card Fraud – A chargeback by a customer when a card is compromised and then used to undertake illegal transactions.
Retailer Error – Chargebacks arise as a result of retailer mistake, such as where the retailer bills an erroneous billing number.
Friendly Fraud – Friendly fraud happens when an account holder accepts a product or service but either shifts their decision or does not remember the fee on their purchase order because they forgot about the transaction.
Credit card chargebacks are inconvenient occurrences for retailers, but they are not going anywhere anytime soon. According to Juniper Research, credit card chargebacks are rising by 20% a year. Not only is the procedure infuriating, but a chargeback cost on each contested payment will quickly add up, wasting the company revenue. However, there are several methods for lowering credit card chargeback expenses.
Credit Card Handling and High-Risk Seller Accounts
A high-risk merchant account is a credit card processing account for retailers whose services are deemed to be high-risk by an issuing bank. Although credit card payment is critical for high-risk sectors since it enables retailers to obtain processing facilities that they may be unable to obtain, high-risk companies generally have a higher rate of credit card chargebacks.
Credit card payment networks normally switch to banks to reclaim payments that were already passed to the seller, regardless of the justification for the chargeback (permissible or not). Financial firms often fail to open accounts for high-risk companies because they choose not to cope with chargebacks and other variations.
High-risk retailers, on the other hand, can obtain access to credit card processing and other payment option facilities by using a payment system and a merchant account. High-risk firms may use payment gateways to avoid unfair chargeback penalties to enable a bank more likely to deal with them with a reputable payment service.
5 Easy Steps to Avoid Chargeback Fees
Here are several precautions you should take to stop credit card chargebacks - and the somewhat complicated chargeback process:
1) Use Extensive Details of The Company's Name
If a customer does not notice a purchase fee on their credit report, a friendly chargeback will occur. This will happen if the buyer does not know - or remember - the name of the firm. As a result, they could contest the charge as fraudulent.
To avoid friendly credit card chargeback issues, your credit card charging descriptor should be close to your company name, and your business items should be properly described. By properly reminding consumers about the order, a comprehensive assertion descriptor will help to reduce possible chargebacks.
2) Use the Proper Technology
Since technology is evolving at such a rapid rate, it is important to keep the credit card transactions up to date. Although there are several options available, using an established payment processor will assist in avoiding chargebacks connected with backdated payment systems. The more authentication options and alternate payment solutions your payment processor offers, the more appropriate it is to avoiding credit card chargebacks.
3) Updated Security Actions
Credit card theft is the leading cause of chargebacks, responsible for 30% of all setbacks. You can help deter credit card theft and chargebacks by introducing security mechanisms such as fraud prevention filters in the payment service. The following are two popular fraud filters:
Card Verification Code (CVV/CVV2): A three-digit authentication code found on the backend of all credit cards, the CVV/CVV2 is an access control code found on the rear of all credit cards. When a cardholder makes a transaction, they insert their credit card information, which includes the bank identity number and the keyword. If the identification code does not fit the data of the issuing bank, the card would be rejected as a safeguard.
Address Verification System (AVS): When ordering online, this procedure requires the account holder to type their payment details. The retailer will check the payment details against the issuing bank records; if they don't fit, the payment can be refused.
4) Increased Payment Compatibility
Locate a payment processing company that accepts digital payments from any place and is compliant with a range of payment types. Payment processors that have been updated to support multi-channel payment systems are less likely to trigger service or merchant failures that may lead to chargebacks. Advanced payment technology has the most open and seamless processing experience possible, with no glitches that could lead to contested transactions.
5) Simple Reimbursement Process
Customers who would not likely request chargebacks will benefit from a flexible return program. This involves making refunds as convenient as possible; customers should be able to create a small refund request and get their refunds approved quickly. The concierge is more likely to give friendly chargebacks if the customer support mechanism is efficient. Provide the customer service phone number or email address, for example, in the assertion descriptor. When searching for a refund, people can easily call the appropriate number.
Prevent Credit Card Chargebacks With Myuser
Myuser works exactly the same way as Amazon does to minimize chargeback. Customers are contacted and offered the option to open a chargeback through email in this case, which has little bearing on the banks' complaint rate. We minimize chargebacks by converting them to internal factors. Buyers can submit proof through Myuser's web portal. We also offer it to the bank if the customer opens an account with them. If the account were opened via Myuser, we deliver proof to the customer and attempt to convince them to resolve the chargeback dispute.
The safest payment service providers will fight over repercussions and actually lock the money in order to "bear" the danger. Instead of freezing your high-risk merchant account, Myuser "regulates" the vulnerability by assisting you with proper measurement.
Myuser includes chargeback protection to substantially lower the dispute rate, guaranteeing that your online store runs smoothly.