If you are a small business owner and you accept credit cards, then you know that chargebacks can be a costly and frustrating affair. Fortunately, there are ways to reduce them, and stop fraud from ruining your bottom line.
A handy way to deter fraudulent purchases is to require personal information about the customers before they complete the checkout. This may include cell phone numbers or social media accounts. You can get this information by adding a login section or by adding mandatory input fields to your checkout. This way you could also block future purchases from a specific user. While checking out, you could also collect the user’s IP address and location and verify their location with their shipping or billing address. The more data you require from your customers, the less likely they are to cheat the system or to abuse your business.
All of this is also good top-funnel conversion acquisition: getting user data protects you and makes them easier to market to at the same time. However, be careful: requiring too much data and putting up too many roadblocks can reduce conversion rates. Users want a streamlined purchase experience, and this needs to be balanced against your security.
It is also important that you have a clear payment descriptor. A payment descriptor is what the customer will see on their banking statement. If you were to title your payments as something other than your business name, people may not recognize the withdrawal, and they’ll request a chargeback. To prevent that from happening, you should make sure that the descriptor is something that your customers can easily recognize and link to your business. E.g. if you only sell one product, you could also title the payment under the product name.
Chargebacks are unavoidable, so having processes in place to help deal with them is important. A handy thing to have in place is a sales agreement—this is a contract between you, the seller and the buyer. In this contract, you should clarify that the customer is purchasing your product and that you will be withdrawing the agreed funds from their account with the provided credit card details. You should also list all your contact details on this agreement so the customer has an easier time getting in touch if there are issues.
Most credit card processors will provide you with chargeback notifications. As soon as you receive the notification, you should get in touch with the customer in order to solve the problem. This is why it’s doubly important to get some sort of contact information from them, preferably an email address: it helps you verify that they’re not scammers, and can help you to sort out issues legitimate customers are having.
You should conduct routine training programs where you can train your workers on how to correctly deal with customers. In these sessions, you should talk about fraud detection techniques and what to do when faced with the situation. Your employees should also be up-to-date regarding the laws and protocols surrounding credit card payments.
You should also keep a record of all your credit cards transactions. You can use this information to find out about a customer requesting a chargeback. With this information, you may find that a customer has repeatedly purchased products from you and has claimed multiple chargebacks over the previous months. You can use this information to plead your case with your bank. A business should keep thorough records for a whole host of reasons, but they’re absolutely critical in handling fraud and chargeback situations.
I hope this helped: chargeback can be extremely stressful. Running an eCommerce store isn’t for the faint of heart, though if you’re diligent, clever, and tenacious, it can really pay dividends. If you want to learn more about how to best promote your business online, you should read our top eCommerce tips. If you want a CRM that’ll help protect you from fraud while streamlining your business workflow, you should look into LimeLight CRM. Our teams love LimeLight, and we’re happy to help you navigate installation and maintenance.
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