One of the things that are unavoidable when you’re into selling services or products is the chargeback. Business owners must be wary of chargebacks as these may incur huge losses for the business if chargebacks get out of control. And it can possibly hurt their relationship with card networks.Merchants must take steps to ensure that they only have minimal chargebacks and to be able to prevent and control chargebacks, the reason why it occurs must be understood first together with the common chargeback reason codes and why they are filed.
Chargebacks are disputed transactions of customers on their credit card transactions. The merchant is required to reverse the transaction and to return the customer’s money. Chargebacks are made to protect consumers from unauthorized transaction so that no time is wasted with arguing with suppliers on the transaction’s legitimacy but instead a customer can simply file a chargeback transfer. Sometimes clerical errors caused chargebacks. Bank may also instigate a chargeback without the knowledge or involvement of the cardholder. This happens when there is an anomaly found in the transaction. But regardless of the reasons, merchants must find a way to mitigate it.
1. Incorrect Product or Size Ordered – One of the most common types of product return which can be easily controlled and remedied by making sure that sales staff are knowledgeable of the products and services their store is offering. Giving the customer’s a chance to test out the product before paying for it will benefit the brick and mortar stores. For online retailers, details of the product and services they are selling should include everything one has to know about their product such as clear and accurate product description, pictures taken at different angles, detailed sizing charts and instructions and also customer reviews to help the customers get the right products the first time.
2. Products or Services Does Not Match the Description on Website or Catalog – This type of return shows bad business practice because the product descriptions whether it be online or in print must be detailed and accurate. An extra effort to proofread the description and images must be done. It is necessary to check and double check that all the product descriptions and the images used are right with the correct size, color, and information.
3. Cardholder doesn’t recognize the transaction/Unauthorized mail or telephone transactions – If your business accepts phone orders, it is safer for the merchant to get as much information as they can from the customer. For instance, the customer’s address and the CVV2 of the credit card.
4. Services not rendered or merchandise not received or defective – The common reasons as to why this type of chargeback is filed are as follows.
a. The merchant failed to deliver the products/services.
b. The merchant billed the cardholder before sending the merchandise.
c. The merchant didn’t deliver the items on the agreed upon delivery date.
Customers will file for dispute if they do not receive the services or merchandise they bought. That is the reason it is advisable for merchants to keep records of shipping receipts as well as to track the products they ship.
5. Credit not processed/ invalid credit card or account number – Make sure that your payment system is configured to reject any expired or invalid credit cards. If the system cannot locate a valid account number of the credit card that has been used, a chargeback may incur.
6. Duplicate Processing – System error may cause double charge of a customer’s credit card. A duplicate charge can also be made if the customer has mistakenly pressed the PAY button twice in doing online transaction.
7. Human Error – If an accountant is processing the credit card manually, there is a chance he/she might make an error. Avoid doing the manual processing.
8. Fraudulent Transaction – Deliberate of Criminal fraud contributes to excessive returns. This product return involves using counterfeit money or stolen credit or debit card and returning the product for a refund to get cash. This also involves stolen merchandise.
9. Transaction amount differs from the agreed upon amount.
10. Canceled recurring transaction.
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