How to Prevent a Chargeback

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Chargebacks are frustrating and it’s what online merchants despise the most. It is not only the loss of your product or service, but also the risk of expensive fines, account closures, and even blacklisting. Definitely this is a major threat to your online business. Chargebacks are an unfortunate part of ecommerce but practical and smart merchants can learn from some their chargebacks experiences.

When a consumer asks his or her credit card company for a refund, a merchant can suffer a chargeback. The credit card company will reach into a merchant’s bank account and take the total amount of the transaction that’s being charged back. Then, any one of three or more different types of organizations could charge the merchant a fee for its trouble. Throughout this process, no one bothers to inform or ask the merchant. Avoiding chargeback is all about communicating and setting expectations.

Set Product Expectations. Make sure that the customer could correctly understand what he is ordering. He may decide to return the purchase or, worse, call his card-issuing bank and initiate a chargeback if conflicts happen. To set this right, use clear product description. Include product dimensions, weight and all applicable measurements. And don’t to forget to describe materials and special handling.

Set Shipping Expectations. Clearly mention when their product is likely to be shipped, how many business days? Consider adding an “About Shipping” section to your site, describing how you pack orders and why it can take several days for a package to arrive

Set Policy Expectations. If good fences make good neighbors, then good policies make good online retail transactions. To set these expectations explain step by step how a customer can return or exchange an item. Require customers to accept store policies as they check out and if refunds are required, pay promptly.

Set Customer Service Expectations. When a customer has a problem, he or she expects you to be there. Acknowledge customer service emails automatically, setting the customer’s expectations about when they’ll get a response .

It’s important to understand that the way the chargeback system works is in favor of the customer and the process is sometimes abused. You need to do everything you can to ensure that if you do have to issue a challenge or your account comes under scrutiny, you’ve taken all the appropriate steps.