Refunds and chargebacks are an unfortunate but necessary part of doing business. If your products or services don’t meet expectations or if they don’t work correctly, customers will want their money back and you’ll need to provide it if you want them to return.
With direct refunds you can at least negotiate to find out what the problem is, see if you can fix something to make it right, offer store credit instead, or at the very least pay the refund in cash to avoid any electronic fees. However, chargebacks make you pay fees both ways and you have very few options as a merchant to dispute it. That’s why so-called friendly fraud is such an issue. Still, there are several important business tactics that can help keep your chargeback rate to a minimum.
When a customer demands a refund, they’re ready to speak to whoever can make it happen. As the merchant in question you’re the most obvious choice, but if you make yourself hard to contact by keeping contact information off your website’s front page or an “About” or “Contact Us” page, your customers will turn to their credit-card company instead. You should also make sure your products come with contact and customer service information.
There’s always a temptation to make more promises than your products and services can keep. After all, the more you promise the more people will want to buy from you. However, that won’t work as a long-term strategy since word will get around that you can’t live up to the expectations you set. Disappointed customers will then demand refunds and chargebacks.
Another unscrupulous business practice is to set up a recurring payment plan and then make it very hard for customers to figure out how to end the plan, or at least make it expensive to terminate the plan early. This strategy may have worked well for certain companies in the past, but chargebacks are easy to perform these days and your contract practices may come into question if you dispute them. Making a plan easy to end is in the best interest of both you and your customers.
Some chargebacks are unavoidable, either because your company made an honest mistake, your customer doesn’t want to speak to you to demand a refund, or because you or your customer are the victim of fraud. Still, by running your business right and being available to customers you can make sure chargebacks remain a small and manageable part of your company’s losses.
Posted in Chargeback on Sep 19, 2019