Chargeback Management in the E-commerce Industry

By Terrance Palmer posted 09-25-2020 01:38


Few people starting an e-commerce business worry about chargebacks. However, they soon learn that these transaction reversals can ruin a company’s bottom line because of its costs. Companies are losing money because of the chargeback system, leading to a need to put in place protocols to minimize chargebacks and their financial effects.

The chargeback system exists to protect customers from fraudulent charges on their accounts. They report a dispute to their financial institution and have a transaction nullified.

Here are ideas for managing chargebacks in the e-commerce industry:

Addressing primary causes of chargebacks

In the e-commerce business, a company relies on deliveries of its products. When customers do not receive their delivery on time or as promised, they will trigger a chargeback. They are more likely to do this than contact a seller to cancel the sale or arrange new delivery timeframes. 

This might not be your business’s fault, as packages are stolen from doorsteps or delivered incorrectly. Nevertheless, the buck stops with you, and a failure to keep delivery promises reflects poorly on your company.

Customers expect prompt deliveries, and while you should strive for this outcome, be first to contact clients when something goes wrong that will affect their delivery. This action alone will prevent many chargeback transactions.

Beware of friendly-fraud activities

It is not worth a company’s time to dispute every chargeback received. Often, the total amount does not justify the cost of a dispute. Additionally, the burden of proof is on your enterprise to show that a chargeback was not based on legitimate reasons.

Many consumers file chargebacks without realizing that they are not legitimate. The most common scenario is a customer nullifying a transaction because it is quicker than contacting the merchant to cancel that sale and request a refund.

At Accertify, this chargeback management firm trains employees to recognize these trends and advises your company of its chances of successfully disputing these transactions. However, according to relevant statistics, the success rate of chargeback disputes is skewed in favor of consumers.

Provide excellence in customer service

Even when a customer has gone to the trouble of contacting a company to cancel a sale and request a refund, they still initiate a chargeback because they cannot get anyone to help them.

The resultant frustration is what leads a client to opt for a chargeback. Choosing between a quick visit to their banking website for a chargeback or hours on hold is simple enough.

When your company offers excellent customer service responsive to clients’ queries and needs, chances of chargebacks begin reducing. Ensure there are enough customer service agents on duty and set up different options for clients who need to contact you. These include callback services, online chats, and email queries. These are useful for clients who cannot spend a lot of time on the phone.

Look actively for fraudulent activities

While you want to keep the online payment process easy for the customers, an important component of your transaction process should be an address verification, especially for large purchases. This eliminates fraudulent activity where someone uses a stolen credit card to make purchases and receive goods.

When the legitimate cardholder realizes that a thief has used their card, they trigger a chargeback. Without the perpetrator’s real identity, your company is unable to seek legal relief.

The right system will alert you to discrepancies between billing and delivery addresses, which could indicate fraudulent activity. Without knowledge of the zip code related to a card, a fraudster cannot proceed with a transaction. Fraud losses contribute to the downfall of many companies. E-commerce stores have the advantage of having transaction processing systems that can insist on additional verifications before concluding a deal.

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