Disclose the Approaches to Decrease Chargeback and Frauds?
Although chargeback is a way to protect customer’s interest, but it is misused by few customers who does not have good intention
A chargeback happens when a customer disputes a charge on their bill. It’s a sort of refund, but the main difference is that a refund doesn’t lead to any dispute. But chargebacks are the consequence of criminal fraud or friendly fraud and sometimes it may also happen due to merchant errors.
There are lots of reasons for chargebacks, but the most popular reason is when a cardholder doesn’t acknowledge a transaction on their bank statement, In some cases, chargeback happens due to customer dissatisfaction, a technical mistake while generating the invoice, or fraud.
Whenever a customer files a chargeback and it will go under investigation, the issuing bank needs to allocate a code which indicates the reason for the dispute, Hence, the merchant gets to know the reason why Client returns his money back.
Every credit card association, like Visa, Mastercard, or Discover have its own set of chargeback reason codes.
Now, we will understand in detail, what are reasons which lead to chargeback
Affiliate Fraud: Here, few malicious affiliate marketers permit lots of fraudulent transactions to earn their huge revenue in the back of the merchants. In this case, merchants aren’t aware of these fraudulent activities.
Unfulfillment of Expectation: when customers are not satisfied with the packaging or shipping or quality of the product. Product does not meet the clients’ expectations. It will lead to chargeback disputes, and it impacts merchant’s business.
Payment Processing issue: These occur at the payment processor’s end. Sometimes, it can be considered a technical glitch. But it affects the revenue of merchants.
Terminated Transactions: Although these are legitimate chargebacks, they affect merchants’ revenue and reputation.
Ways to reduce chargebacks
We have already mentioned that chargeback protects consumers interest, so it is impossible to get rid of chargeback, but there are few ways through which merchants can reduce the same.
1. Maintain the security of website
Fraudsters are searching for every single loophole and bug in outdated software, so merchants should keep updating her website frequently and technical errors must be fixed as early as possible. Encode the data of the website, consider using the Address Verification Service (AVS) that validates the cardholder’s address, and collect the CVV/CVC.
2. Provide details product description in Ecommerce
Product description should be provided in detail when a merchant is selling a product online. And remove the product when it is not available to avoid any dispute. Sometimes providing proper contact details in the website and round the clock customer support help to sort out any dispute as clients firstly prefer to talk to merchants before going to the bank.
3.Trustworthy payment provider
Merchant should ensure that his payment processor offers anti-fraud tools which are based on machine learning, AI-based solutions, and an efficient chargeback disputing mechanism. According to Chargebacks911 and CNP’s report, companies that use third-party chargeback management solutions, can reduce chargebacks by 19%.
4. Generate proper refund/ return policies
Refund policy should be properly visible on the website so that users can easily understand. Offer a transparent refund process when a customer isn’t happy with the ordered product. Giving detailed data about return and refund policies can help you to avoid chargebacks and avoid negative reviews
5. 3D Security is always preferable
3D Secure is an extra layer of security. It protects the merchants by transferring the responsibility from the merchant to the issuing bank. If the transaction is approved by a customer with the code, then in case of a chargeback, the issuer needs to cover the costs and take on the risk and liability.
6. Monitor orders
Merchants should keep a track on the patterns of the ordering of a particular product from a particular address, so that he can recognize links between the purchases being made. He can act promptly when a transaction is deemed risky. Also, he should keep detailed records of all transactions, consequently it will be easier for the merchant to gather evidence and valid proof when a chargeback occurs.