Credit card chargeback is an unfortunate thing for small businesses. Well, people are living in a cashless era and the number of credit card transactions is rising day by day. Credit card transactions and credit card chargeback are inextricably associated with each other. It is something that encourages online customers to do more online credit card transactions. If the online consumers see any kind of fraudulent transaction made using their credit cards, they can raise a dispute. This is when credit card chargeback happens. On one side, it makes online transactions safer for the customers but, on the other side, it creates trouble for the businesses that are accepting credit card payments.
If the dispute raised by the customers is valid, the transaction amount will be debited from the merchant account. Apart from this, the merchant processor will put a chargeback fee that can be anything between $15 and $100. Well, there are certain scenarios that make the dispute valid. As a merchant, you should understand this. We have highlighted some of them below:
- If the transaction has been made by a fraudster using the real identity of customers, the real customer might raise a dispute. In such a case, the merchants will have to deal with the chargeback.
- If the customer does not receive the desired service or product, he or she may raise dispute charges.
- If the customers are unable to recognize the charges that they have got in their credit card statement, he or she may issue a credit card chargeback.
Understand The Ecosystem Of Credit Card Chargeback
Well, if you are a merchant, and running a business online, you must understand the ecosystem of credit card chargeback. It generally occurs when the customers ask the bank for reversing the credit card charge. Most people might get confused between refund and credit card chargeback. Well, in the case of a refund, the customers get the money directly from the merchant. It is something that the merchant issues. On the other side, if we talk about the chargeback, the credit card processor handles this thing. A customer requests for a chargeback in the following scenarios:
- The merchants are unable to provide the desired service or product
- If the description of the service or product is not accurate
- If the product was lost or damaged during the shipment
- Fraudulent transactions made by any third party using the real identity of the customer
- Technical error
- Recurring billing was not stopped even after raising a request
- Duplicate billing
As of now, you have understood when a customer can request a chargeback. Well, there are certain scenarios that you can prevent such as duplicate billing, and product loss during shipping through the implementation of good business practices.
Consequences Of Chargebacks
The merchants can suffer a lot if the consumers request the credit card chargeback to their banks. We have highlighted some of the consequences here:
One of the deadly consequences of credit card chargeback is the loss of revenue. If the dispute is valid, there will be a reduction in the merchant account made by the payment processor. Moreover, if the merchant wins this chargeback, the credit card processor will still charge a non-refundable fee for each chargeback filed by the customers. It can be anything between $20 and $100. Apart from this, the merchants cover the returning payment and shipping costs of the consumers.
Hamper The Reputation Of Merchant
Well, credit card chargeback brings negative impacts upon your business. Moreover, the credit card processors and banks will not view your business positively. Even, if you win the chargeback, the whole thing will still hamper the status of your business. If the merchants fail to mitigate the number of chargebacks, the merchant processor will charge a higher credit card processing fee. In addition to this, the credit card processors might seize your merchant account.
How To Avoid Credit Card Chargebacks
There are certain ways through which a merchant can avoid credit card chargeback. We have added some of them in order to give a concrete idea.
Make The Service Or Product Descriptions Clear
Well, as an online merchant, you should make your business as transparent as possible. You should make the service or product description clear so that customers can understand what they are actually purchasing.
Comprehensive Refund Policy
If you want to avoid credit card chargeback, you should make the refund policy comprehensive. You can add the refund policy to each receipt copy or you can mention it in your online marketplace. The merchants will have to make the refund policy as specific as possible.
Not A Rapidcents Merchant?
If you want to uplift your business, you need a renowned merchant processor. Thus, in such a case, Rapidcents should be your ideal choice. This payment processor provides a fraud prevention service. You will be able to eliminate credit card chargeback even while accepting more orders for your business. This virtual platform adds more value to every transaction.