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Refund requests and chargebacks are two features that online shoppers particularly love. They buy an item from your e-commerce site, using their credit card, but then when receive the order they discover that:

• The products is different from what they have seen in the item presentation picture
• It lacks certain features which were mentioned in the small text item description (for example, it stated that the remote controller comes with two AA batteries, while in reality it didn’t)
• They are not satisfied with how the product functions

There are hundreds of reasons that can make a customer unhappy with their purchase, and if they ask for a chargeback, this is going to cost the merchant extra money.

Strategies a merchant should implement in order to avoid chargebacks

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Setting up a perfectly running e-commerce business is not easy. You had to work hard on implementing the right marketing strategies, you needed to pay for the services of a reputable SEO company to handle your website optimization, plus in order to keep up with your competition, and you need to be innovative. It is not worth loosing everything you have managed to build; therefore, keep in mind the following:

• Product presentation photos – these must be as realistic as they can; you should avoid adding a different picture for the item you are actually selling. For example, you should not add the photo of an original Apple iPhone, if you in fact are selling low priced knock-offs.
• Product description- you should add every important detail in the text, but avoid adding specifications that in reality have no importance. Also, you should add annotations like “color may differ slightly from the picture”, if it is the case. Let the customer have no surprises of any kind when he/she receives the package
• Terms and conditions – this is where your credo as an online merchant will be described, and also where the return policy is described in detail.

If you pay attention to these three details, you will definitely be able to prevent chargebacks from your clients.

Top notch customer service may keep refund requests at bay

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The truth is customers like to be looked after, and feel important, and you can give them that through a very well setup online customer service.

• Quick responses to email (24 hours at most) will put you and your business in a very good light. Even if someone is only asking a question, it is important to give a prompt response. Not to speak of when a client wants to return the item, and contacts you through e-mail. You can settle so many disputes, if you show your clients that you are present and willing to help.
• “We are sorry for the inconvenience” – this is the magic phrase that should be repeated to unsatisfied customers through the phone. People are prone to change their minds very quickly, when they sense that they are treated respectfully. Remember this, and the number of chargebacks is going to get smaller with each day.

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Chargeback is a phenomenon that has become quite frequent over recent years because of the increase in the fraudulent that is occurring these days. You ought to look out for ways to prevent chargeback for as much as you can just to make sure that the money that you get does not go away. These methods and tips are helpful once you wish to get minimum chargeback from the customer.

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Use better services to avoid risk

• Use a better and high risk e-commerce merchant account that can protect you a great deal getting you a TMF status. This status along with the e-commerce company ensures fewer chances of such events making your experience with the online business healthy.
• Make sure that there is no automatic transaction going on without verification from the merchant account providers. This has been the reason to many chargeback events occurring and the automatic transaction will stop fraud based transaction. Every transaction will be checked and authorized making sure that what you get at the end is filtered transaction.

Research and update yourself with the processes

• Credit card processing is a subject that you need to research a lot in order to get to know how the setup completely works. Get yourself updated with the credit card company that you are working with so you understand the hardcore of chargeback.
• Both Visa and MasterCard provide you with their distinct security systems. You need to avail the auxiliary security systems that have been provided by them; this way, the companies are going to filter every request using their management system and you will get appropriate results at the end.

Merchant provider selection

• Merchant provide selection at the very first place is another of the key factors you need to consider before you start up a business. You need to see if your merchant account provides you with secure and stable services that make the functionality of your account improved and enhanced.
• Use a service that is known in the market for services and supports as you might need any vital follow up any time. This will also help you to track down transactions well in time so that the fraudulent one can be eliminated.

Shopping cart script integration

Once you are starting a new online business, or you have been fighting with chargeback cases in the history, you can look forward to a better shopping cart script. There are a number of scripts available online so look out for the best available option in the market that provides you with settings and controls suiting your functions. These will make sure that there exists no issue or bug while the transaction takes place ultimately ensuring no chargeback. This will also enhance the communication between the payment gateway and your business.

A combination of all the above mentioned tips and the quality selection of merchant account and online shopping cart integration can be of a great help ensuring less chargeback and therefore you can save a lot of your time and resources that is usually wasted while dealing with these chargeback cases.

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Chargeback is actually a state that allows the consumers to ask for the reversal of a transaction in case the goods purchased do not meet the requirements specified or in case you Visa card has been charged for a transaction that you did not make. This is part of the Visa Scheme Rules that every financial institution has to implement if they issue Visa cards. The system works between both the banks i.e. yours and the bank of the merchant and cash still flows even if the merchant has stopped trading.

Chargeback requirements:

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There are a number of requirements that set you eligible for the chargeback are summarized below:

• You need to have a contract that is breached.
• Further evidences that enforce the breach.
• 120 days time limit on the claims.

• The time limit starts from the day when you realize the problem.
• If the object has been delivered to your address, the limit starts from the day when you have received it.
• In case that chargeback is for the flight ticket, it will start on the day the flight was set to depart.

Chargeback Cycle:

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The chargeback process begins the moment you report the issue to the card issuer. The following chain of processes flow if you request for a chargeback:

• The Visa Card Holder lodges the issue/complain.
• Issuer generates a reverse transaction electronically back to the acquirer.
• Acquirer receives the issue and forwards it to the merchant after validation.
• The merchant can either accept the chargeback or address it appropriately with the evidences and sends it back to the acquirer.
• The acquirer then reviews the information received from the merchant and forwards it to the issuer in case the details have been dealt with properly by the merchant.
• The issuer reposts the money back into the card holder’s account in case the chargeback has been addressed possibly else it moves the issue to the Visa for financial liability decision.
• Cardholder receives the dispute resolution information and is credited with the amount.

Chargeback resolution:

Chargeback can be resolved quite easily without the merchant losing the sale. They can come up with appropriate information and evidences about the transaction to ensure that they have provided the service at the right time with the right details. The best way to get done with the chargeback request is to give as much information as available to the acquirer that will help them remedy the chargeback. The best way to save your reputation as well as your good will is to come up with the best possible yet prompt reply as soon as you receive the chargeback request. This will help you a great deal as the acquirer will have no doubt about this anymore. In case the chargeback is valid and the request is made live, you should prefer to resolve the chargeback request outside the proper procedure to avoid any extra fees. No response should only be made when you assume that you have enough information to address the chargeback.

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There are indeed quite a lot of advantages of accepting credit cards for your online business transactions; the main advantage being the increase in sales and global reach of the business. But with every such boon, comes a curse which may ruin the reputation of a Merchant. Credit Card chargeback is one such thing that every merchant wants to stay away from. Such repeated chargeback ruin the reputation of the merchant and eventually result in drastic fall in sales volumes.

What exactly is a chargeback?

A credit card chargeback is a kind of a customer protection mechanism adopted by every credit card issuer. This right is provided to every credit card holder in the US by the Regulation Z of the Federal Reserve under the Truth in Lending Act. If some buyer files a chargeback against a seller for the amount he/she has paid for the purchase via his/her credit card, the buyer can get back the paid amount back to his bank account. Though this process takes some time, but for fraudulent transactions one can easily get his money back. This reversal of payment can be viewed as an added advantage of using credit cards for purchase instead of cash.

When can a customer file chargeback?

A customer can file chargeback for the payment made by his credit card anytime he thinks that the transaction has been fraudulent. Here are some of the events when the customer can file a chargeback to the credit card issuing bank:

• Product received is not as described, or customer not satisfied with the product

• Fraud on part of the buyer or seller • Transactions done with a stolen credit card

• Double billing for the same product, which may take place due to faulty transaction between the bank and the merchant. This is also known as Duplicate Charging

• Date entry error or untimely processing of the order request which may lead to the delivery of unwanted items

• No product received within the specified time frame

How can a customer file a chargeback?

Filing a chargeback against a merchant, though not a hectic process, but is very time consuming. Here’s the process how one can ask for the refund of the payment made.

• The cardholder needs to call the credit card issuing bank and explain the problems or the reasons for their chargeback. He must have sufficient proof with him as otherwise, the chargeback or the credit card dispute is considered invalid and the customer is charged a processing fee thereof.

• Credit card issuing bank asks for a mutual agreement with the seller and the buyer. If that does not take place and there’s no mutual agreement, the chargeback is filed by the bank to the merchant.

• A thorough investigation is done by the buyer bank and the merchant’s credit card processing bank and proofs are submitted by both the parties for this.

• If the credit card issuer of the buyer thinks the transaction is fraudulent, then it transfers a temporary amount to the buyer’s account and asks for it from the merchant’s bank, which transfers it immediately if it thinks that the transaction has really been fraudulent on the merchant’s part.

• If the merchant’s proofs are valid and both the banks agree to that, the chargeback is considered invalid and the customer is charged a processing fee.

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Receiving a chargeback is one of a merchant’s worst nightmares, and the reason why it happens is because a customer does not recognize the merchant’s business on their credit card statement. They can’t remember who was it who charged them, or what they bought, for that matter. It’s like someone coming up to you, asking for a debt to be paid out – only for you to stare blankly at the person because you can’t seem to remember, or even know who he is!

As a result, the customer reports this matter to the credit card companies and the merchant will be issued a chargeback. In some rare cases, especially when American Express cards are concerned, chargebacks are issued even when a customer did not ask for one. As far as merchants know, AMEX have been very strict on their chargeback policies and merchants often have no say even when customers want the chargeback reversed.

So what can a merchant do to counter this problem? For starters you should take a look at your descriptor. A descriptor is the name or phrase the customer sees upon receiving their credit card statement. Normally a merchant’s business name (DBA) is used as part of the descriptor, but there is a limitation to how much one can squeeze into the descriptor space.

The solution to this is simple: merchants may choose to use a domain name as his descriptor, allowing customers to remember that they’ve indeed made a purchase with this particular merchant.

Merchants should also avoid operating more than one type of business for the same merchant account or even sell vastly different types of products. Instead they should know that a unique merchant account for each website they start will greatly minimize the chances for chargebacks to be issued.

Finally, merchants can take precautions by registering a domain related to their business or product name, redirect it to a particular webpage that explains the charge to customers, and other details meant to jog their memory in case they have forgotten. A good example can be found here.

It can take only a few minutes or an hour to start looking at your descriptor and make changes that will result in your chargeback decreasing. There’s no better time like the present.

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