Chargebacks are a frustrating and costly occurrence for businesses. They can hurt a business’s cash flow and reputation with card associations.
A few practical tools and technologies can help you reduce credit card chargebacks. These include customer service, dispute resolution, and fraud detection.
Collect Additional Information
Chargebacks are a real headache for merchants, costing them money and their reputation. But they are also a critical metric financial services companies use to determine the risk of lending or processing payment cards.
But there are ways to reduce the number of chargebacks. One is to create customer-friendly exchange and refund policies that minimize the possibility of cardholders disputing charges.
Another effective tool is to collect additional information about customers. Collecting this data, you can better understand how your customers make purchases.
This can help you identify first party fraud or other problems before they occur. It can also improve your brand’s reputation by giving your customers a clear and comprehensive understanding of what they’re purchasing.
Share Your Payment Descriptor
When a customer purchases online, the credit card issuer records it on their billing statement. This record includes a name of the merchant and a description of what was purchased.
When a business changes its billing descriptor, it can help to reduce chargebacks. Customers are more likely to recognize a transaction if they can quickly identify the business on their bill.
For this reason, including the merchant name and website domain in your descriptor is essential. Having a phone number so a customer can contact you directly is also a good idea.
Before you change your billing descriptor, send test transactions to different issuing banks to ensure that it immediately and quickly identifies your business. You can then tweak your descriptor to ensure it’s optimized and formatted correctly.
Collect Digital Signatures
Digital signatures are an essential tool for businesses looking how to reduce credit card chargebacks. They are also a great way to build customer trust and increase conversion rates.
Digital signing enables companies to go paperless and reduce the use of resources, time, and money associated with processing and transporting documents. They also make internal record-keeping easier by creating an audit trail of all communications.
Digital signatures are also used to ratify contracts, run paperless banking, process loans, set up insurance schemes, etc.
Integrate with an Order Validation Tool
Order validation tools help verify customer orders before they are processed. They allow merchants to weed out fraudulent charges before they are processed and can reduce chargebacks by ensuring that only valid orders are processed.
Using a system like this helps you ensure that only legitimate orders are processed and thereby helps to increase customer trust. It also allows you to build leverage in chargeback cases and reduce your chargeback expenses.
Another important step to reducing chargebacks is ensuring you only sell high-quality goods or services. This can be done by avoiding low-quality goods and services and promptly delivering the products or services your customers have ordered.
Integrate with a Fraud Detection Tool
Integrating an effective fraud detection tool into your system will enable you to identify potential scammers and prevent fraudulent transactions. These tools have real-time fraud detection capabilities that evaluate various factors to instantly detect suspicious activities and ensure that only legitimate transactions pass through your system.
Whether your business is online or in person, you need to have a system that can verify the identity of customers before they make a purchase. This can include validating credit card information, checking for matches to CVV numbers and billing addresses, and other factors.
A robust fraud detection strategy can help reduce chargebacks and improve customer experience. It can also reduce costs and help you focus on disputes you can fight.