One thing that many credit card processors don't like is chargebacks. Too many of them and you can jeopardize your relationship with your payment processor. Preventing chargebacks through your online business portal isn't easy, but it's worth it to take as many steps as you can to do so.
1. Understand your processor's chargeback policy. This is the first step towards preventing them. Each processor has its own guidelines. Be wary of dealing with a processor that doesn't clearly spell out what its chargeback policy consists of.
Knowing the details of the policy will help you understand what steps you need to take to prevent them, as well as the steps you need to take if one occurs. Additionally, you will know beforehand what kinds of penalties or fees to expect from a chargeback.
2. Have a willingness to work with your customer. A lot of the time, your payment processor will give both you and the customer a window of opportunity to settle the issue before they investigate or issue a refund. In most legitimate cases, the customer will likely reach out to you first to complain or air their grievance before immediately seeking a refund.
That's your chance to make the situation right, if you can. Depending on the problem, it may cost you less to simply replace an item, upgrade a service, or otherwise give the customer what they want.
3. Keep extensive records. Make sure that you keep a record of everything involving a transaction. This is a little easier for online purchases since you don't have to deal with the physical card, or swiping, or accidentally double swiping.
Online, the customer initiates the transaction. So you'll have records of those transactions automatically. However, when you ship the item or deliver the service, you should make sure you keep everything else as well. That goes for,
- Tracking numbers
- Any correspondence
- Delivery confirmation notices
- IP Addresses
If a customer requests a chargeback because they say they didn't receive the product or didn't order it, then you will have everything you need to prove otherwise.
If you're prone to deleting things or throwing out old pieces of correspondence, then you need to reverse that behavior. Keep everything and have the most recent transactions ready to pull up at a moment's notice.
4. Make your shipping and return policy clear. You should have a clear shipping and return policy. Post the policy on your site. Post it on all correspondence. Make sure it shows up before the customer can authorize a transaction.
If you have a boilerplate policy, go over it and personalize it. A bad policy can actually work against you. Returns can become costly, but at the same time, making it hard for customers to return things can turn into chargebacks. Make sure your policy takes that into account.
5. Offer a quality product and service. There are many ways to prevent chargebacks, but the best thing you can do is stay honest and deliver a good customer experience. Besides, too many chargebacks will
- Cost you a lot of money in fees and penalties
- Cause you to lose your payment processor
- Other processors may hesitate to work with you
But remember the first step. When choosing a payment processor, talk about chargebacks with them to help you avoid these types of outcomes.