How to Minimize Chargebacks for Your e-Commerce
Chargebacks may be a great feature for customers as it helps easily undo mistaken payments. But it all happens at the expense of merchants who suffer money and reputational losses as chargebacks emerge. In addition, it’s heavily exploited by various online swindlers. With the right payment gateway, though, you can avoid most of them.
Preventing Friendly Fraud: Saving Money and Respect
The most unpleasant thing about friendly fraud is that banks are always ready to satisfy their customers’ interests, rendering you unable to protect yours. But you can take some measures to minimize the risk of these situations.
· Take care to avoid mistakes on your side. Double-check anything you ship, so the size, the color, and the model, in general, is what the customer ordered (if options are available). Track the delivery to stand your ground in a possible dispute.
· Make it easier for customers to contact you directly. In a perfect world, a human manager should be available 24/7 for customers to address any possible way: on the phone, via email or messengers, or with a web page chat. In reality, you may have a bot answer the most common question and only be bothered when an issue cannot be handled automatically.
· Write your merchant descriptor better. After the transaction, the customer should receive a message telling where they made a purchase, what they bought, important details of the item (size, color, material, memory, whatever may characterize it), and so on. This will prevent the I-bought-and-I-forgot type of chargebacks.
· Activate chargeback alerts. This will let you know instantly about chargeback claims, so you will have a chance to handle the problem yourself. Contacting the customer, you may remind them about what they actually bought, try to settle the misunderstanding between family members, respectfully refresh their memory, or offer an alternative solution.
After this, you may still have to make a refund. But this will not impact your reputation, so you will not enjoy greater transaction fees, credit card penalties, and other consequences of chargebacks happening too often. In addition, customers may appreciate your attitude and return to you for more purchases, making it a win-win situation in the end.
Preventing Criminal Fraud: You Shall Not Pass!
On the other hand, there are criminal chargebacks. They mostly happen as purchases are made from someone else’s cards using their stolen credentials. After the owner learns about it, they claim chargeback, and as these claims are satisfied, the merchant is on the losing side. This type of criminal chargeback cannot be resolved by good will. The best way to handle it is to detect potentially fraudulent transactions and decline them. How is it possible?
There are multiple levels of detection that can help to rate the riskiness of the transaction:
· Details of the transaction itself. Is the CVV code correct? Does the delivery address match the street address of the card owner? Does the email look natural or randomly generated? These questions arising as one looks at a separate transaction can help first.
· Transaction comparison. Do the details of this transaction match earlier ones? Did the street address change since the last time? What about purchases from multiple cards using the same street address, or vice versa – from one card to multiple addresses? Has anything changed in the user details? The KYC policy implies merchants can and even must store this data and may use it to compare the details and thus rate the chance of fraud.
· Device fingerprinting. It’s like the previous step, but it also involves information about the device used to complete purchases. It compares the details within a transaction and between various transactions using the same device, the same card number, street address, and so on. This gives a new perspective, for example, when a purchase is made from an unusual location, from an array of devices instead of one, or to addresses that don’t match the location data.
Think in Advance!
These are methods that reduce chargeback losses for your business to an acceptable level. To enjoy these benefits, you need to connect this service as you connect a payment system to your store. So, when you think about accepting payments online, you better care about safety as well and check what they can offer.
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