How To Prevent Chargebacks And Fraudulent Payments: 6 Tips

Making your business capable of accepting digital
payments is, without a shadow of a doubt, one of the most
effective strategies to boost your sales and broaden your
market without making a significant financial commitment. On
the other hand, since online processing is synonymous with
CNP transactions, there is a greater possibility that
cardholders would submit a complaint against the retailer
because they suspect fraudulent activity.

For this
reason, merchants need to be proactive in reducing
chargebacks by taking the essential actions, which they can
find here.

What exactly is a Chargeback you

This happens when asks for a cancellation of
purchase. A customer is eligible to get a refund for an item
they have purchased if the item is defective, does not match
the description given, got lost, or if the consumer can
provide evidence that they did not make the transaction. If
the receiver’s bank is in the wrong, the first bank will
take back any money that it has previously placed into the
account of the recipient.

This strategy incentivizes
the production of high-quality products to customers but
also leaves firms open to the possibility of being defrauded
via a variety of means, which might have a considerable
effect on their finances.


This unfortunate event happens when a customer
makes a valid shopping via bank or credit card and then asks
for a chargeback. In this kind of fraud, the consumer is not
the one who committed the original fraudulent transaction.
If it is accepted, the customer will not only be allowed to
retain the item but will also be given a complete

On the other hand, some individuals who engage
in cyber theft attempt to take advantage of chargeback
process to obtain things for free.

How can merchants
avoid losing money because of chargebacks in online

1. Observe the Specific Protocols for
Payment Processing

Each card network has its own set
of protocols to follow when dealing with transactions when
the card is not physically present. To fulfill some orders,
you may be needed to collect information such as the
customer’s IP address, employ AVS and CVV verification, or
receive proof of delivery to ensure the most
reliable payment method
is taking place.

If you
follow the rules, you will identify potentially fraudulent
transactions before they are ever carried out. If you choose
to disregard them, the card network may make a decision that
goes against you with a chargeback dispute.

Dedicated Customer Service for Returns

Ensure that
you have a person or team in place that is specifically
designated to handle purchase-related questions and returns.
Before initiating the chargeback process, the client speaks
with a representative of your firm to settle any problems
that may have arisen before the transaction was first

3. Offer Refund Options and

Chargebacks are in place to protect the
consumer, and by giving refunds on goods or services you are
reaffirming your confidence in your brand and building a
feeling of trust with the client. Chargebacks are in place
to protect the customer. It is in your best interest to
think about getting a refund for the merchandise rather than
having to deal with a chargeback.

4. Use a
Recognizable Merchant Descriptor:

One of the most
common causes of chargebacks is when a customer does not
recognize a transaction that appears on their credit

For example, if you do business under many
names, you need to ensure that the firm name shown on the
merchant description is identical to the name of your online
shop. Also, make sure the description contains a phone
number that works so that clients contact you before heading
to their financial institution.

5. Make Use Of
Payment Systems With Several Layers:

Problems should
be avoided at the checkout by adopting a method with many
layers, including:

· Notifications for chargeback
avoidance and
address verification services (AVS),

· Methods
for verifying emails,

· Order validation tools like
Shopify e-commerce plug-ins,

· Phone number reverse

· Shipping and billing address

· Buyer
velocity limitations
for transactions,

· Card
verification values, commonly known as card security codes,
are another name for card identifiers (CVV).

The back
of a Visa or Mastercard, as well as the front of an American
Express card, reveals the location of the security code. In
addition, the POS terminal you choose may use several
anti-fraud procedures, therefore ensuring that your company
remains in compliance with the payment card

6. Make The Delivery And Invoicing
Procedure As Open And Honest As Possible:

One of the
most frequent types of client grumbles is that they did not
get the thing that they had ordered.

Make your
procedure clear by:

· Providing more diverse
alternatives for shipments: To ensure that there are no
surprises and that all expectations are met, give
information such as delivery dates, tracking numbers for
packages, the current status of orders, and proof of
shipping insurance.

· Informing clients about the
status of the delay: communicate with your consumers and
update any delays on your website so they are aware of any
potential delivery delays.

· Notifying clients of
purchases that are now out of stock Before making a
purchase, inform the customer of the expected delivery date
for any item that is out of stock and will take longer to

· Using drop shippers with an excellent
reputation: Verify a company’s credentials and learn about
their shipping method before working with them if you employ
drop shipping.

Don’t Ignore Chargebacks:

worst thing you can do to avoid chargebacks is nothing.
Doing nothing is the worst thing you can do. Create a plan
to stop customers from disputing payments by leveraging the
information provided by your payment providers,
point-of-sale (POS) systems, and

© Scoop Media


Source link Shopify Tips

Post Author: Adam Jacob

Leave a Reply

Your email address will not be published. Required fields are marked *