How To Prevent Chargebacks And Fraudulent Payments: 6 Tips

Thursday, 22 September 2022, 8:31 am
Press Release: Hugh Grant

Making your business capable of accepting digital payments is, without a shadow of a doubt, one of the most effective strategies to boost your sales and broaden your market without making a significant financial commitment. On the other hand, since online processing is synonymous with CNP transactions, there is a greater possibility that cardholders would submit a complaint against the retailer because they suspect fraudulent activity.

For this reason, merchants need to be proactive in reducing chargebacks by taking the essential actions, which they can find here.

What exactly is a Chargeback you ask?

This happens when asks for a cancellation of purchase. A customer is eligible to get a refund for an item they have purchased if the item is defective, does not match the description given, got lost, or if the consumer can provide evidence that they did not make the transaction. If the receiver's bank is in the wrong, the first bank will take back any money that it has previously placed into the account of the recipient.

This strategy incentivizes the production of high-quality products to customers but also leaves firms open to the possibility of being defrauded via a variety of means, which might have a considerable effect on their finances.

Chargeback Fraud:

This unfortunate event happens when a customer makes a valid shopping via bank or credit card and then asks for a chargeback. In this kind of fraud, the consumer is not the one who committed the original fraudulent transaction. If it is accepted, the customer will not only be allowed to retain the item but will also be given a complete refund.

On the other hand, some individuals who engage in cyber theft attempt to take advantage of chargeback process to obtain things for free.

How can merchants avoid losing money because of chargebacks in online shopping?

1. Observe the Specific Protocols for Payment Processing

Each card network has its own set of protocols to follow when dealing with transactions when the card is not physically present. To fulfill some orders, you may be needed to collect information such as the customer's IP address, employ AVS and CVV verification, or receive proof of delivery to ensure the most reliable payment method is taking place.

If you follow the rules, you will identify potentially fraudulent transactions before they are ever carried out. If you choose to disregard them, the card network may make a decision that goes against you with a chargeback dispute.

2. Dedicated Customer Service for Returns

Ensure that you have a person or team in place that is specifically designated to handle purchase-related questions and returns. Before initiating the chargeback process, the client speaks with a representative of your firm to settle any problems that may have arisen before the transaction was first processed.

3. Offer Refund Options and System:

Chargebacks are in place to protect the consumer, and by giving refunds on goods or services you are reaffirming your confidence in your brand and building a feeling of trust with the client. Chargebacks are in place to protect the customer. It is in your best interest to think about getting a refund for the merchandise rather than having to deal with a chargeback.

4. Use a Recognizable Merchant Descriptor:

One of the most common causes of chargebacks is when a customer does not recognize a transaction that appears on their credit card.

For example, if you do business under many names, you need to ensure that the firm name shown on the merchant description is identical to the name of your online shop. Also, make sure the description contains a phone number that works so that clients contact you before heading to their financial institution.

5. Make Use Of Payment Systems With Several Layers:

Problems should be avoided at the checkout by adopting a method with many layers, including:

· Notifications for chargeback avoidance and address verification services (AVS),

· Methods for verifying emails,

· Order validation tools like Shopify e-commerce plug-ins,

· Phone number reverse lookups,

· Shipping and billing address confirmations,

· Buyer velocity limitations for transactions,

· Card verification values, commonly known as card security codes, are another name for card identifiers (CVV).

The back of a Visa or Mastercard, as well as the front of an American Express card, reveals the location of the security code. In addition, the POS terminal you choose may use several anti-fraud procedures, therefore ensuring that your company remains in compliance with the payment card industry.

6. Make The Delivery And Invoicing Procedure As Open And Honest As Possible:

One of the most frequent types of client grumbles is that they did not get the thing that they had ordered.

Make your procedure clear by:

· Providing more diverse alternatives for shipments: To ensure that there are no surprises and that all expectations are met, give information such as delivery dates, tracking numbers for packages, the current status of orders, and proof of shipping insurance.

· Informing clients about the status of the delay: communicate with your consumers and update any delays on your website so they are aware of any potential delivery delays.

· Notifying clients of purchases that are now out of stock Before making a purchase, inform the customer of the expected delivery date for any item that is out of stock and will take longer to ship.

· Using drop shippers with an excellent reputation: Verify a company's credentials and learn about their shipping method before working with them if you employ drop shipping.

Don’t Ignore Chargebacks:

The worst thing you can do to avoid chargebacks is nothing. Doing nothing is the worst thing you can do. Create a plan to stop customers from disputing payments by leveraging the information provided by your payment providers, point-of-sale (POS) systems, and personnel.

© Scoop Media