A chargeback – when a consumer asks his credit card provider to refund a payment – is every merchant’s nightmare. It’s bad enough when a chargeback stems from an actual fraudulent transaction. Worse are the chargebacks that could have been avoided; for example, a consumer doesn’t recognize a charge – or is simply unhappy with a purchase – and calls the credit card company instead of you. You lose the sale and incur fees and, potentially, fines as well. And with too many chargebacks, banks could deem you too high a risk and freeze or even close your merchant account. Your business’s very existence is at stake. The good news: there are simple, common-sense measures you can take today to prevent most chargebacks from happening. Here are a few:
Make sure customers recognize your charge
As merchants, you are required to disclose your business name and address on your website. If you use a third party to process payments, such as SegPay, make sure you disclose that their name is the one that appears on billing statements. That is actually required by the major credit card associations, but make sure you aren’t hiding it. Display it prominently to ensure that cardholders recognize your charge and don’t mistake it for fraud.
Keep the lines of communication open
It’s a fact of life that you’ll have an unhappy customer from time to time. Make sure you are prepared when that happens, by making it as easy as possible for customers to get in touch with you. That way, small problems don’t turn into big ones. Remember that different people will look for different ways to reach you. Some may ignore your contact form and immediately look for a phone number or chat window. Are these available and easy to find on your website? If not, they should be. Providing as many alternate methods of communication as possible, e.g., phone, email, chat, etc., ensures that you are catering to customers on their terms, and their time line. If you don’t have (or want) the staff necessary to man the phones and emails 24/7, many payments providers can do it for you.
Make it easy for customers to cancel a subscription or return a product
If you use SegPay, or another third party biller to manage your payments, make sure it’s easy for customers to contact them/us as well. That’s actually a requirement for doing business with us. We handle refunds and cancellations, and urge merchants to list our contact information as clearly as possible on their websites.
You may be tempted to make cancelling difficult, but people can get easily frustrated if they have to spend time searching your site. Remember that their alternative is to call the credit card company, so make it as easy as possible to cancel. At a minimum, have a Billing Support or Customer Support link on your homepage. Consider including those links in the footer of your site, so they appear on all pages. Add the links in email receipts and within your Members area (for content providers), as well. If you have a search box on your website, type “cancel” or “return” and see if it quickly gives you the correct page. Don’t let a chargeback be the easiest way for someone to cancel.
Make sure the ads match the product
The old bait and switch. Most consumers have experienced it at least once. You see a shiny new product online. The description matches exactly what you need… or so it seems. You buy it. Then it arrives and it’s a different story. Maybe it’s damaged, used or simply doesn’t perform as expected. Or maybe you bought a subscription and it turns out the content is not what you thought. How does that make you feel? If you’re like many people, it probably puts you in the mood to make an angry call to customer service… or to your card issuer for – you guessed it – a chargeback.
It’s worth the effort to make sure your online sales pitch matches the actual product. That includes delivery information. If it takes six weeks to deliver a product, don’t advertise “fast delivery.” Don’t claim two-day delivery and hide in the fine print that it takes three days to handle and package the product, so the actual delivery time is five days. Be honest with your customers and they will come back, and give you rave reviews on social media.
Consider a money-back guarantee
You offer a great product that people love, and you’re rightfully proud. So stand behind it! The card brands already require you to post a refund policy, so why not advertise it prominently? As consumers, any online purchase we make involves some risk. Maybe we won’t love the product. Maybe it won’t be as great as advertised. Why not remove the risk? Make sure customers understand that they are not on the hook if they are unhappy with a purchase for any reason. Sales can increase when customers see a lower risk. If you’re not sure, experiment with how prominently you advertise your guarantee and see how it affects sales. It might just put more money in your pocket. Even if you see more refund requests, your sales may increase enough to offset the rise. And those extra refunds may have been chargebacks before. When the customer comes to you to resolve an issue, even if it means losing a sale, you often earn respect and will likely be given another chance. Most important, you prevent the nightmare of a chargeback and the potential long-term pain that comes with it.
