Online businesses and eCommerce stores can implement these seven best practices to avoid losses due to customer chargebacks.
Did you know that the average eCommerce merchant suffers a 1.4 percent loss of their total revenue due to chargebacks. Merchants lost an estimated $4.1 billion in 2016 as a result of such cases. Between 2015 - 2016, fraud and chargebacks cost eCommerce merchants up to $2.4 for every dollar lost in an incident. The number of chargebacks will grow by 41 percent within the next two years. The financial implication alone will hit a whopping $50 billion by the end of 2021. Where will your business be within the numbers?
Chargebacks happen for different reasons. Sometimes it could be a payment processing error or for good reasons. But criminals have exploited this loophole to scam merchants and get away with cash. There are four categories of chargebacks. These are fraud, authorization issues, processing errors, and cardholder disputes. The first instance of chargeback was intended to protect customers and help them reclaim their funds once they make a purchase to a fraudulent online store. However, the customer protection measure does little to protect merchants and businesses. Hence threatening cash flow due to fraudsters.
Here are easy solutions that businesses can practically implement to eliminate or reduce chargebacks.
1. Clear and Complete Product Descriptions
Add clear photos of your productions and ensure you put out clear and complete descriptions of your physical products. Remember to include dimensions, all product features so the customer differentiates between what they truly want and what they do not want.
When the customer makes an order, they understand beforehand each product feature and will have already noted down the pros and cons of a given item.
The payment system will therefore not process a chargeback because of a mismatch for what they ordered. Additionally, remember to mention all policies related to the items and where a chargeback will apply.
2. Live and Responsive Customer Support
Customers are likely to get irritated due to unresponsive customer support, this leads to dissatisfaction with a merchant’s service and eventually the demand for a chargeback. Avail reliable, convenient, and effective customer support as immediately as needed. Have a dedicated social media presence, this could be on Facebook, Linkedin or even both. Check the comment section of your social media posts and find out whether there are any complaints from your customers. Notwithstanding, chat support, email and phone support are a must-have.
3. Reputable Payment Descriptor
The first thing your customer will notice on the credit card statement after making a purchase is the card descriptor. Where a customer is unable to relate the name on the statement with your card descriptor, they are likely to initiate a chargeback. Use a recognizable brand name for all your payment descriptors to simplify the checkout process for customers.
4. Purchase Confirmation Emails
Notify your buyers with a confirmation email after they make a purchase. This will ensure they can complete the order of an item once they have double-checked the complete details of that particular item, date of delivery, and tracking data. If your product is a freemium message, purchase confirmation emails are a must-have. This is because customers are supposed to access a product for a limited amount of time before the payment is automatically billed to their credit card. Sent emails should be clear and have a well-defined billing cycle. Customers have the freedom to cancel out the plan if they are not satisfied with the product. Therefore, making it clear when and how to cancel the subscription before they are billed.
5. Stick to Delivery Dates
Customers will often be irritated by delayed deliveries. If they have to wait for too long, they might have the urge to initiate a chargeback. Strictly adhere to a delivery schedule and let your supplies and logistics partners understand the dates. Checkpoints you should make clear to your business partners include due dates, storage, and packaging delivery requirements. Besides, the customer should have the freedom to track their deliveries. Hence, enabling them to know the status of an order, whether in shipment or already delivered. This will reduce incidents of chargebacks.
6. A Convenient Return Policy
Put in place a reliable return policy. Let your customers remain comfortable that they will get their money back if they return an ordered product. An effective return policy can allow the business to exchange the product, in case of spoiled products. Besides, the business can also save on additional fees charged by the payment platform when they send the money back themselves.
7. Fraud Protection System
Implement a system to detect signs of credit card fraud. The system can shut a purchase when it identifies any suspicious credit card activity. Most of the checks implemented on an ecommerce checkout to identify fraudulent activities are dependent and not limited to the following:
High order values
Unmatching credit card details against personal identification
Ecommerce services ought to be excellent and conducted in the smoothest way possible. This is because the business will not meet its customers face to face when transacting. Thereby, all transactions are based on trust. A good eCommerce business should therefore set itself apart as reliable, efficient, and convenient. According to Chargebacks911.com, 4 percent of dissatisfied eCommerce customers will communicate and file a complaint with the business. The rest, 96 percent of dissatisfied customers will either go silent or file a chargeback.
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