Chargebacks for Services: Prevention Tips for Merchants

what are chargebacks

Every online merchant has encountered chargebacks at least once. This is a financial action that involves canceling a transaction. Before this, the buyer usually contacts their issuing bank in case they are dissatisfied with the buying experience or think they have been cheated during this transaction. It doesn’t matter what kind of online business you’re in: selling physical or digital goods, providing services – you can still get a chargeback request.

To make your business more successful, increase revenue and customer satisfaction, and maintain a good relationship with banks, it’s important to prevent chargebacks in a timely manner. However, you need to process chargebacks for services using different tools and strategies than when you sell physical goods.

In this article, we’ll explore what a chargeback for services is and what options exist for businesses to prevent chargebacks for services.

Chargebacks by Product Type

All of the products that are commonly sold online can be divided into three types:

  • Physical goods include clothing, electronics, books, food, and others.
  • Digital products, such as video games, eBooks, apps, movies, and other products that exist digitally.
  • Services, such as marketing, accounting, interior design, etc.

Regardless of online activity, every type of eCommerce is subject to chargebacks. There are a large number of reasons why this happens today. Each credit card network has its own reason codes, but they can all be broken down into four main groups: authorization, fraud, processing errors, and consumer disputes. Most of the reason codes in these groups can apply to any merchant, and it doesn’t matter what they sell.

Also Read  Blockchain and the World's Growing Plastic Problem

Not all online merchants know that a high chargeback rate risks financial losses and more severe penalties for merchant accounts. Such companies could be penalized or even denied payment processing privileges. It is therefore important to use a chargeback prevention service to keep your online business running efficiently.

Chargebackhit is a service that prevents chargeback disputes and helps keep your company profitable by analyzing information on every transaction and exchanging data between issuers and customers in real time.

How to Prevent Chargebacks for Services

While almost every eСommerce business is at risk of receiving a chargeback request, and it’s impossible to completely protect yourself, many companies are using specific tools and developing chargeback prevention strategies to help reduce chargebacks and keep revenue at a high level.

The first thing to do is to understand the causes of chargebacks and try to fix them. In order to understand the causes, it is important to read the chargeback reason codes that are written in the transaction descriptions.

Also Read  Reviewing Digital Yuan's Mining Algorithm in Detail

Having analyzed and studied many of the reason codes, we concluded that the vast majority of reasons for chargebacks are fraud. And about 75 percent it’s friendly fraud. These are cases where the buyer requests a chargeback from the issuing bank instead of a refund from the merchant, or the cardholder tries to get the item for free by telling the bank that the item was not delivered.

Whatever the reason for a chargeback for a service, below are tips to prevent chargebacks for merchants.

Use Clear Service Descriptions

In order for your customers to have a clear idea of what they are paying for and what they are getting in return, it is important that your services are described accurately and uniquely. You shouldn’t use complicated professional words or sentences that can be misleading.

It is equally important to include an exact time frame for the services and how long they will take to complete. If you are selling tiered services, it is also important that each package or tier gives the customer a clear idea of precisely what they are buying.

Write and Share User-Friendly Policies

Your store’s policies, as well as the return policy, give potential customers an understanding of how to handle problems if they arise. It should make it clear that consumers should contact the vendor if they are unhappy with their purchase and want a refund.

Also Read  Rivobanc Review - Practice Your Trading Skills with Rivobanc

Complicated and heavy-handed policies hidden on website pages can lead to misunderstanding on the part of the customer and, as a result, receiving a chargeback request. You should make it a point to allow consumers to address all of their concerns before they go to the bank.

Honor All Cancellation Requests

Today, many services use recurring payments for their services, which are deducted from customers’ accounts every month. However, customers often don’t know how to opt out of these regular payments or request to cancel the service, but it is not executed.

A great tip that works well is to send a reminder to the customer a few days before the charge is executed. Also, every notification should include simple instructions on how to cancel automatic debit services before it happens. If you receive such a request to cancel recurring payments, you should do it as soon as possible and notify the customer additionally.

The Bottom Line

Fighting chargebacks for services is a confusing, difficult, and expensive process that requires certain skills and special tools. Fortunately, Chargebackhit exists to help companies prevent and fight chargebacks. It’s a unique technology service that analyzes every transaction for fraudulent activity and takes care of full chargeback management, thereby protecting your company’s revenue and increasing its efficiency.

what are chargebacks

Next Post

How To Write A Plagiarism-Free Research Paper

Wed Aug 10 , 2022
Contents hide 1 Writing Plagiarism Free Research Paper 1.1 1. Avoid Any Kind Of Copy Paste 1.2 2. Create Your Own Ideas 1.3 3. Content Paraphrasing 1.4 4. Use Plagiarism Free Software 1.5 5. Make Use Of Quotations And Statistical Data 2 Is This All? Students learn, adopt and imbibe […]
what are chargebacksResearch Paper
error: Content is protected !!