Whether you’re accepting payments on a mobile device or an online store, you want to avoid chargebacks as much as possible. A chargeback is issued when a customer disputes a charge with their bank and are reimbursed the full amount, leaving it up to the business owner to resolve. This not only looks bad on the business, but it raises red flags to your online payments provider.
3 Ways to Avoid Chargebacks
1. Be Upfront and Transparent
Whether you’re selling physical goods or a SaaS product, make sure you describe every component of your product in full detail. If there’s a piece of “fine print” that you don’t want your customers reading, you probably want to rethink your product line. This may seem like an obvious practice, but often times businesses fail to fully disclose information regarding their products.
Images and or interactive demo’s work best for product description. The more details you can give regarding your products the more informed your customers will be before making a purchase. For SaaS products, offer a free trial so you can eliminate any barrier of entry for your customers. Once the trial period ends, provide your customer with an immediate call to action so they can purchase your product.
The more information you provide the more you’ll be able to mitigate chargebacks. In addition, when trying to resolve a dispute, you will have more leverage in your argument if you provided a detailed description of your product prior to their purchase.
2. Easily Accessible Refunds
A refund is very different than a chargeback. While a refund isn’t always positive for your business or it’s cash flow, it is a very good indicator of where you can improve.
There are many reasons why you should offer refunds to your customers.
- You want your customer to come to you before their issuing bank. If your business offers a convenient way to issue a refund, you’ll decrease the chances of customers going through their issuing bank and hence requesting a chargeback.
- Avoid negative reviews. Even though your customer may have not liked your product, you’ll avoid any negative reviews by allowing them to refund their purchase.
- Know where you have to improve. When a customer issues a refund, provide a form field that allows them to describe their issue. Use this information to improve your products so it doesn’t happen in the future.
Issuing a refund to your customer isn’t always ideal, but it’s exponentially better than dealing with a chargeback dispute.
3. Be Readily Available
Customer service is the biggest line of defense against chargebacks. The maximum chargeback rate for the industry is 1%. That means if you want to stick around, you don’t want to be anywhere near that percentage.
Along with standard anti-fraud measures, some aspects are out of your control, the main one being an unhappy customer. Providing a top notch customer service experience is way easier said than done. Take Zappos for example, they didn’t build an online shoe store, they built a Zappos brand that customers grew to trust and love. They accomplished this through their customer service philosophy.
It’s very important to not get ahead of yourself though. Don’t make empty promises to your customers that you know you can’t fulfill. If you offer a 24/7 chat bot on your platform, make sure you have someone operating that service 24/7. It’s better to deliver late than not at all.
Chargebacks aren’t only a negative for your business. They can also shut your business down from accepting payments or even operating. Use these three tips to avoid chargebacks so you can keep things moving in the right direction!