Chargeback Protection

What is a Chargeback?

A Chargeback occurs when a customer disputes a merchant charge on their credit or debit card. The customer’s card-issuing back or financial institution then initiates recovery of the funds from the merchant. 

Why Do Chargebacks Happen?

• Credit card fraud: these are often valid if the customer has been a victim of credit card fraud - in this case, it can be difficult for merchants to dispute chargebacks successfully.
• Merchant fraud: this occurs when a merchant fails to deliver faithfully and thoroughly on the original transaction. 
• Friendly fraud: when a customer makes a purchase and the merchant follows through accordingly but the customer still files a dispute. This type of fraud can be either accidental or intentional, and it’s the main chargeback type that merchants should focus on fighting.

Tips to Reduce Chargebacks

1. Outstanding customer experience. Merchants should cultivate customer loyalty by providing an overall easy and enjoyable experience, including warm, personable and helpful customer service at all touchpoints.
2. Minimize merchant errors. Many chargebacks occur due to errors on the merchant’s part - ex. incorrect amounts charged to the customer’s account. Merchants can minimize such errors by manually checking all customer and transaction data to establish a strong quality control procedure.
3. Establish a post-sale process. Merchants can avoid chargebacks after the initial sale is complete by consistently communicating with customers during transit and after delivery to keep communication channels open in case they do have a complaint.
4. Make sure to strictly adhere to payment protocols. Best practices include enforcing AVS (Address Verification Service) and CVV (Card Verification Value) confirmation. Merchants that handle credit card payments are obligated to be fully PCI compliant. Ensuring full and correct application of payment protocols can help merchants identify inconsistencies and potential fraud before a chargeback can take place.
5. Make returns and refunds policy clearly visible to customers. Providing customers with clear, concise information on your returns and refunds policy can help merchants minimize chargeback occurrence. These should be easily accessible and visible at different applicable touchpoints along the customer journey.