Chargebacks are an inevitable part in a number of transactions being processed across the globe. There are a number of reasons due to which chargebacks occur. Your customer can ask for chargeback in case of a stolen credit card or some error that occurred during payment processing on your part. Let’s understand first the reasons leading to chargebacks.
So, what Exactly Causes Chargebacks?
Most chargebacks are cardholder initiated - inconsistencies in credit card statements being one of the primary reasons for the same.
Still, being a merchant, you need to know the different cases that bring up such circumstances. Following are the reasons for chargebacks –
- Fraudulent Transactions - One of the most critical reasons for chargebacks is fraudulent transactions. Use of customer’s credit card information without his consent & authorization is counted in the category of fraudulent transaction.
- Product Not Received – It is one of the most common causes leading to chargeback and occurs when customer does not receive the actual product he paid for using the credit card.
- Technical Issue – Errors during payment processing due to technical issues lead to a major part of the chargeback requests raised worldwide. Duplicate processing during a single transaction and issues with authorization are also counted among the technical reasons leading to chargebacks.
How to Avoid Chargebacks?
In order to keep cases of chargeback to a minimum, you need to consider following tips –
- Make sure that transactions with declined authorization requests are not completed. If the credit card number being entered by the customer is being declined again & again, make sure that you have other options like eCheck, debit card etc., to offer to the customer.
- Ensure that your customer gets access to the requested products/services before you actually charge the customer. A customer may raise dispute against the charges made on his card prior to receiving the products/services.
- Ensure that the payment gateway system you deploy has provisions for checking duplicate charges. In this manner, you can avoid chargebacks pertaining to repeat transactions.
- Keep your customers informed about whatever details they require – be it about refund, return or some other information. You can arrange for sending e-mail to customers informing them about the amount charged from their account.
- Do take valid authorization approval code before processing transactions.
- Never change the transaction documentation unless cardholder authorizes you for the same.