Avoid Credit Card Chargebacks
The credit card chargeback is the bane of the online merchant’s existence. Although any credit card charge may be disputed, it is more likely that customers will forget the details of a purchase they made online. When the charge shows up on their credit card statement, they may dispute the charge just because they do not remember making the purchase.
When a customer initiates a chargeback, your merchant account provider will deduct the disputed amount from your account and ask you to provide proof that the charge is valid. It is time consuming and, even if you prevail, you may be charged $20 or more because you had a chargeback. Have too many chargebacks, and you could lose your merchant account.
Here are a few things you can do to reduce the number of chargebacks you receive.
Most importantly, deliver what you promised. If a customer does not receive what they ordered or what they receive is not what they expected, they may reverse the credit card charge. Use a method of delivery that includes a signature so you can prove that the item was delivered in the event of a chargeback.
Make it easy for customers to contact you if there is a problem. If they can not find a phone number or other way to reach you to make a return or request a replacement of damaged merchandise, they will call their credit card company to ask for their money back.
Only ship to the billing address on the credit card, and make sure your credit card processor matches the billing address entered by the customer to the billing address on file with the credit card issuer. Your customers may find this inconvenient if they wish to ship a gift to someone, or have their credit card statement sent to a different place than they receive parcels. However, if you are getting a lot of chargebacks due to fraudulent charges, or your average purchase is for a large amount, you may wish to do this.
Because many chargebacks occur when customers do not recall the purchase, here are some ways to help them remember who you are and what they bought:
Provide an order confirmation or receipt customers can print out. Suggest that they print the receipt and save it for their records, or to compare to their charge statement.
Remind them who you are. If your website name is not the same as the name on your merchant account, include a statement in the order confirmation that, “Your credit card will reflect a charge from
Remind them of the purchase. Send a follow up email a couple of weeks after the purchase thanking them for their order and reminding them of the amount of the charge and how it will appear on their credit card statement.
Put your phone number or web URL on their statement. Contact your merchant account provider and ask them to include your phone number or URL next to your company name when a charge appears on a customer’s credit card bill. That way if the customer doesn’t remember the charge they can call or visit your website to jog their memory.
Chargebacks are unpleasant and expensive. Although you probably can not get the number of chargebacks to zero, taking these steps will keep them manageable and keep your merchant account safe.
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