How to Avoid Chargebacks When Possible?

Chargebacks are a blessing for customers and a curse for merchants. Not only can you lose too much money but also be qualified as a high-risk merchant account, with eventual problems with banks. Are there ways to secure your business from this threat?

Yes, there are methods to minimize (if not fully eliminate) chargebacks. With the right payment gateways that use AI to rate any transaction risks, you can be sure your chargeback rate will be as low as possible. Here are the measures you can take to prevent chargeback disasters.

How to Prevent Friendly Chargebacks

One popular sort of chargeback is called “friendly fraud”. It happens when a good-intentioned customer really forgets about a purchase they made and requests chargeback. And it happens. Though this sort of chargeback is hard to prevent, as it does not qualify as fraud and show any signs of it, there are ways to minimize this risk and maximize the chance the dispute will end in your favor.

  •  Make the most use of your merchant descriptor. Include the full name of your business, as well as details of the purchase. This will help the customer identify this purchase. Look at a Netflix or Apple descriptor as an example. When you get charged for your subscription, it is explained as clearly as possible.
  • Check the delivery. Watch the tracking, so you can make sure the package was delivered and handed to the buyer. If so, they cannot deny the fact.
  • Don’t change the price after the order was placed. This is a good reason to request a chargeback, and the dispute will probably end in the customer’s favor.
  • Be correct in details like size, color, image, and anything that can vary in your goods. If you ship the wrong version, it’s also a chargeback reason.
  •  Make it easy for customers to contact your support if anything goes wrong.
  • Offer alternative ways of refunding.

How to Prevent Fraudulent Chargebacks

Along with friendly fraud, there are also chargebacks that involve a real crime. Usually, it happens this way:

1.     A criminal makes a purchase using someone else’s card details;

2.     The card is charged, and the item is mailed;

3.     The actual owner of the card learns about it and requests chargeback;

4.     The bank satisfies the request;

5.     The crook gets your goods, you get the troubles.

Not the most pleasant situation, right? And there’s no way to dispute the transaction afterward. The best way to deal with such fraudulent purchases is to decline them. There are several mechanisms for that.

For example, you can benefit from digital fingerprinting. It involves large databases that store information about various card numbers and metadata on purchases made with them: the device platform, browser or app versions, IP address, location, time of transactions, and so on. Based on these, this system can detect a suspicious transaction when the details don’t match the pattern. A different device used from a different spot or even from abroad, to deliver the purchase to an address that doesn’t match the regular one – all that can indicate is fraud.

Other details that can mark high risk are the mismatching address and the wrong CVV code or its absence. The AI analyzes big data, rates the risk, and if it’s higher than a certain threshold, it recommends declining transactions. It all happens within seconds, saving your time as well as risks.

And Don’t You Charge Back No More!

That’s how you can secure your business from this menace – not absolutely, but enough to benefit from reduced chargebacks. It takes just connecting the right payment gateway that also provides the right prevention services. Protect your sales from these recharges; now you know how!

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TBN Editor

Time Business News Editor Team