Mitigating chargebacks is one of the most important things you can do as a high risk business. However, there are so many strategies, systems, and bits of bad advice out there that it’s difficult to find out exactly how to prevent chargebacks.
We’re happy to present you with our top 11 ways that a high risk merchant can prevent chargebacks!
1. Make Sure Your Customer Knows What They’re Buying.
There are few things that push customers towards chargebacks more than receiving something that’s not what they thought they were getting. Include all the details you can about your product, from color and material to size and quantity. Include this information clearly on your product page and, whenever possible, on the checkout page as well.
One important note on digital products. Because they are not “tangible”, digital products are more prone to chargebacks than physical products. It is very important that you set clear expectations on digital products. In the world of marketing, folks who have the best results often under promise and over deliver.
2. Pay Particular Attention to Custom Orders.
When customers add a personal touch to a product, they’re even more invested in how the final product ends up looking. If possible, try to show, as accurately as possible, what the finished product will look like as accurately as possible. After all, customized and unique items rarely have a return policy. The customer’s level of investment coupled with the no-return policy makes these orders very prone to “not as described” chargebacks.
3. Analyze Your Marketing and Lead Generation Sources.
There are only so many marketing avenues available for high risk merchants. That said, you should still carefully examine what you’re using. For example, you might be running a pay-per-click ad campaign that’s generating valuable leads. With this marketing type, you have a great extent of control over how you market your product. As a result, you should have a relatively low chargeback rate. On the other hand, if you have an affiliate system set up, you won’t have the same control over how your brand/products are marketed. In some cases, you might find that your affiliates are providing you with leads that are simply chargebacks waiting to happen.
4. Get the Basics Right!
It might sound silly, but it is critical that you make sure to use essential pre-sale tools such as AVS and card identification numbers. Using Address Verification Systems (AVS) ensures that the address the customer entered for their billing information is, in fact, the address on record with their bank. This drastically mitigates fraud and chargeback issues. Similarly, ensuring that you require card identification, often referred to as CID, CVV2, or CVC, is an excellent way to mitigate fraudulent purchases and chargebacks. This step is designed to establish that the customer is in possession of the card used for the transaction.
5. Make Full Use of Your Billing Descriptors.
Your billing descriptor is the short description your customer will see on their credit card statement. Making full use of your billing descriptor is an excellent way to reduce confusion on your customer’s end by providing accurate, brief information relating to the service/product they bought.
An excellent way to achieve this is to check with your processor whether dynamic descriptors are possible. If so, you can add purchase specifics next to your business name as it appears on the cardholder’s statement. You might also want to check with your processor if your default name is set to your legal name or your “doing business name.” If there’s a discrepancy between the two, the customer might not recognize your name, and the result will be an unnecessary chargeback.
If you are an e-commerce merchant, your web address should show in the descriptor, and your contact page should be easy to find on your site. This is a good way for you to allow the customer to reach you first, before taking action through the bank – this is an excellent way to prevent chargebacks.
6. Shorten the Time Between Shipping the Products and Charging the Credit Card.
When it comes to online shopping, many have a short memory for when and what they bought. If a significant amount of time passes from when you charge the customer to when they receive their products, the likelihood of chargebacks increase. Consider the shipping time and what alternatives you have available to reduce this time gap as much as possible.
7. Send Notifications Before You Charge Customers When Using Recurring Billing.
It’s highly advised that you give your customers a heads-up if you have customers that you charge with recurring billing. This allows your customer time to realize they will soon see a charge on their credit card for your product or service. As a result, they won’t be caught unaware and get the nasty surprise of having less money in the bank than they thought. Simultaneously, you’ll make sure to take steps to prevent chargebacks.
8. Have Realistic and Accurate Delivery Estimates.
If your product arrives significantly later than what you stated when the customer completed their purchase, you might increase your risk of chargebacks! You should make sure to be as objective as possible when you provide a shipping estimate to your customer. It allows them to know exactly what to expect. It’s better to add an extra day or two onto delivery time than to overestimate how quickly they’ll receive their package, only for the customer to be frustrated by delays.
9. A User-Friendly Policy is the Best Policy in Trying to Prevent Chargebacks.
When it comes to refund and cancellation policies, you want to make sure that your customers can easily find, understand, and access them. In order to mitigate and prevent chargebacks, you want your return policies to be customer-centric. You should evaluate whether to include dynamic return times depending on seasonal needs and be accommodating and reasonable. Additionally, you should allow your customers to easily access your policies before, during, and after purchase.
We advise you to include links on the checkout page, and in the footer of your site. If you also include it in your confirmation email, you’ve taken great steps toward ensuring that your customer knows what to expect. However, what separates a decent return policy from a great one is how easy it is to understand it. Do your customers a favor by keeping your policy to-the-point with simple wording and phrases. The better your customer understands your policy, the fewer problems for either of you.
10. Make Sure Your Customers Feel That You Care About Their Business.
Making sure that your customers feel that their voice and concern is heard is invaluable. There are multiple ways you can use customer service to ward off and prevent chargebacks. Offering live chats on your high risk e-commerce site is an excellent way to address concerns in real time. Live chats allow your customers an easy point-of-contact for simple questions and allows you to solve small concerns before they become big problems and potential chargebacks.
Additionally, you need to keep a close eye on your support email account. While 2-3 business days may seem reasonable to many of us, your customers are likely to expect same-day replies.
Answering emails promptly is a great way to make your customer feel that you’re there for them. If you’re using a call center, on the other hand, you have less direct control over how your customers are being treated. You should ask for detailed reports that include the shortest and longest waiting time. With that information, you can start addressing potential issues that may result in problems escalating to chargebacks. The longer the waiting time, the more riled up the customer is likely to be – making a peaceful resolution less likely.
While many high risk businesses use social media platforms for their potential marketing value, your customers use it for communication. Plainly put, you can expect customers to air their grievances there. Be ready and able to address these public frustrations at a moment’s notice.
While we’re on the subject of the public domain, you should keep your contact information publicly available. This opens up another channel of communication between you and your customers. This allows for more opportunities for you to deal with your customers’ problems – and mitigate the risks of and prevent chargebacks.
11. Sign Up for a Chargeback Mitigation Program and Process Through an Appropriate Merchant Account.
While there are many things you can personally do to prevent chargebacks, there are elements outside of your direct control. Financial limitations and regulations with your merchant account can be among them.
At E-Commerce 4 IM, we can help you avoid and manage your chargebacks. Additionally, we can help you with a risk-tolerant high risk merchant account that’s well suited for the occasional chargebacks that, no matter how well prepared you are, may still slip though. Contact us through our website today, or give us a call at 1-800-570-1347.