The payment gateway of a business needs to be highly secured especially when you accept credit cards. If you are a small business owner, knowing how to avoid fraudulent purchases is important to help reduce chargeback.
If you are a small business owner and you accept credit cards, then you might have worried about the unfortunate fact that that chargebacks are quite costly. It’s really unfair but fortunately there are various ways to reduce chargebacks.
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.
It is also important that you have a clear payment descriptor. A payment descriptor is the description or name, 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 recognise the withdrawal and request a chargeback. To prevent that from happening, you should make sure that the descriptor is something that your customer can easily recognize and link to your business. This could be your business name. If you only sell one product, you could also title the payment under the product name. eg. “Facial Skin Cream Purchase”
Chargebacks are unavoidable so having processes in place to help fight 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 no reason not to contact you with any issues.
Deal with customer issues as soon as possible
Most credit card processor 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.
Provide training for your workers
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 when faced with the situation. Your employees should also be up-to-date regarding the laws and protocols surrounding credit card payments.
Keep a record
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 fight your case with your bank.
It’s a horrible situation to lose a chargeback! Follow these tips, prepared and be ready to fight up a good fight!