Chargeback Prevention: 8 Ways to Stop Disputes
Disputes that resolve in chargebacks are a serious threat to any online business, regardless of its type or size. Luckily, there are some ways to reduce the number of chargebacks and safeguard your revenue, so let’s explore them together.
Chargebacks are a common problem a lot of online businesses struggle with since too many disputes have pretty nasty consequences for merchant accounts, especially if it is chargeback fraud we are talking about. But is there a way to stop chargeback fraud? Fortunately, there is, and we will discuss it in this article.
Overview: What Is a Chargeback?
To understand how to protect yourself from chargebacks, you need to know what a chargeback is. So, basically, a chargeback is the procedure of refunding a customer after a dispute.
At first sight, chargebacks seem like a pretty decent option for customers since it protects them from losing money. However, for businesses, chargeback disputes are not a good thing. In fact, too many chargebacks end up being extremely expensive and, in the worst-case scenario, can lead to merchant closure. To back up our words, let’s take a look at the disadvantages of getting chargebacks:
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Fees and penalties
It’s not a secret that chargebacks cost money, but just how much? Well, in general, with all the fees and penalties, you end up paying twice as much of the initial payment amount, which is why having chargeback prevention tools is so important. -
Revenue loss
A dispute that is resolved with a refund doesn’t always mean you get your product back in the condition that allows you to resell it. Moreover, if you provide any kind of services, e.g., online therapy sessions, you end up not being paid for your time and effort at all. That all leads to significant revenue losses, but luckily, chargeback fraud management can help prevent that. -
Approval rate reduction
Too many chargebacks aren’t good for your merchants and payment processing, and they often result in approval rate reduction, so you need chargeback solutions to help you with that.
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Merchant closure
In the worst-case scenario, large amounts of chargebacks can cause merchant closure, and dealing with such a problem is expensive and time-consuming.
As you can see, friendly fraud chargeback usually isn’t caused by digital fraudsters, yet still it is something you want to minimize since it is a rather serious threat for your merchants.
8 Ways to Stop Disputes and Prevent Chargebacks
Dispute prevention is, with no exaggeration, essential for any kind of business, but how do you efficiently protect your merchants from chargebacks? Well, there are some ways.
1. Make the Return and Refund Process Easy
First of all, you have to make sure your return and refund policies are available on your
website, are easy to find, and are clear. That will help you inform your customers about the
terms of returns and, therefore, minimize the number of genuine chargebacks. Try adding
return policies to your FAQ section, clearly informing your customers about return
conditions on the checkout page, providing free return shipping, and offering 24/7 customer
support service.
2. Implement Dispute Prevention Services
To stop both first-party and friendly chargeback fraud and protect your merchants, you will
have to take action and implement a chargeback prevention system on your business website.
In fact, systems like Germius provide reliable protection against most types of chargebacks
and fraud, so you can be sure your website is in good hands.
3. Pay Attention to Multilayered Payment Protocols
The safest your payments are — the fewer your chances of encountering chargebacks and fraud
are. The best way to secure your payments is definitely using a multilayered approach to
payment processing. In particular, such an approach includes: chargeback prevention alerts
(like Ethoca or Verifi), 3D Secure verification, device fingerprinting, card security codes,
velocity limits for purchases, etc.
4. Give AI Systems a Try
Modern AI payment analyzing systems available within such CRMs as Germius help prevent fraud
and disputes at the earliest stages. In particular, AI systems analyze payments in real time
(based on location, BIN code, cardholder’s behavior, etc.), detect suspicious or unusual
transactions, and block them immediately, therefore, protecting you against fraud and
chargebacks. Of course, such systems aren’t perfect, but they are still worth a try.
5. Take a Look at Your Chargeback Data
It is important to analyze your chargeback data to understand the patterns and figure out
the ways to avoid another dispute. The best way to do that is by using a convenient CRM
system that will allow you to get access to your payment data, analyze the transactions and
chargebacks, as well as manually block transactions from certain locations, with specific
BIN codes, or from particular banks. An example of such a CRM is Germius.
6. Make Sure Your Shipping and Billing Is Transparent
To reduce the number of chargebacks, you have to create a trustworthy atmosphere for the
entire process of the purchase — from the Buy button to the delivery of the product. The
best way to achieve that is by informing your customers about the status of their order,
payment, and delivery. Make sure to send your clients email or text message updates about
their orders, especially the details concerning the delivery. That will help stop
first-party chargebacks as well as create a trustworthy relationship between you and your
customers.
7. Meet Your Customers' Expectations
One of the most common reasons for chargebacks is when the product doesn’t meet the
expectations of the customer. In such a case, some online stores do not provide refunds,
which is why unsatisfied customers open disputes. To stop this type of chargeback, make sure
to provide detailed product descriptions and high-quality images on your website. This way,
your customers will understand what they purchase and, therefore, will be less likely to
open a dispute.
8. Train Your Staff
It is impossible to prevent all chargebacks, whether they are fraud or not. Moreover, there
is no chargeback prevention tool that will provide 100% protection. So, you have to be ready
to protect yourself in case of a dispute. The best option here is to have an educated team
of professionals who will bring dispute management to the next level. Thus, you have to
train your staff to analyze each dispute with extreme attention, detect suspicious
transactions, and collect all the important info about a dispute. All in all, if it comes to
a dispute, it’s better to win it.
Chargeback Prevention with Germius
We have briefly mentioned that the best way to stop chargebacks is by means of a prevention tool, but which one should you choose? Well, we recommend you pay attention to Germius. It is a comfy CRM system that provides a wide variety of features, including chargeback prevention. Germius is an official reseller of top alerts that will cover most businesses' needs in the fight against various types of chargebacks — Ethoca and Verifi.
Both alerts provide reliable merchant protection, approval rate growth, and payment security; and, obviously, Ethoca and Verifi help reduce the number of chargebacks and prevent significant revenue losses. So why don’t you protect your merchant accounts against chargebacks with Germius?
Final Thoughts
Most entrepreneurs know that chargebacks aren’t good, no matter if you have a small online store or a large corporation, which is why preventing them is so important. Luckily, today, businesses can easily minimize the number of chargebacks they get and, therefore, protect their revenue and reputation. With tools like Ethoca and Verifi, the war against nasty chargebacks will quickly be won, and you and your customers will enjoy smooth payments and the best user experience.
