Chargeback Reduction Plan

Chargeback Reduction Plan
Lizzy Rosenberg
April 19, 2023

Setting up a chargeback reduction plan is a key step in maintaining your merchant account. Chargebacks are a frustrating and costly issue for most businesses, and can lead to reduced revenue as well as payment processing issues. Nonetheless, there are definitive steps you can take in order to ensure your company is burdened with these reversed charges.

Here are some practical steps as well as tools and resources that can help you get rid of chargebacks and keep your transactions final:

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Identify the Root Causes Of Chargebacks

Understanding why chargebacks occur is crucial in preventing them. Therefore, be sure to review your chargeback data to identify any patterns or trends. This data could be customer information in your payment gateway, product types, or sale location. All of these factors can point to a trend in identifying how and why chargebacks are occurring.

More specifically, you should look for recurring product issues, billing discrepancies , miscommunication, or other factors that may be leading to chargebacks. Once you identify the root causes, take proactive measures to address them and create a plan to resolve them one-by-one.

Chargeback Identification Tools

Companies such as Chargehound and Verifi offer chargeback management solutions that can help you identify chargebacks before they happen . They can also highlight trends and work toward resolving root causes.

Implement Chargeback Fraud Detection

Fraudulent transactions are a main cause for unwanted chargebacks and are especially high in certain industries such as ones that sell internationally. Not to worry, fraud detection and prevention has been the main mission of payment processing authorities since the inception of credit cards.

As a result there are highly technical and effective fraud detection tools and technologies that help you identify scammy transactions before they occur. They include:

  • Address Verification Services (AVS),
  • Card Verification Value (CVV) Checks,
  • Geolocation Tracking
  • Purchase History Analysis
  • Suspicious Product Confirmation

Fraud Detection Tools

Online tools such as Signifyd, Riskified, and FraudLabs Pro provide advanced fraud detection and prevention solutions that can help you safeguard your business against fraudulent chargebacks.

Improve Customer Support

This one is simple; customers want a fast and enjoyable customer support experience, and they don’t want to talk to robots. As a result, an excellent customer experience can go a long way in preventing chargebacks altogether. From the start, ensure your customers have clear and accurate information about your products or services, pricing, return policies, and contact information. Do this well before they click “complete purchase”.

Afterwards, be sure you have a system in place to respond promptly to customer inquiries, complaints, and disputes to address any issues before they escalate to chargebacks. Most importantly, a generous refund program can halt chargebacks outright. If you’ve already given money back to the customer there is no way they can escalate the charge. It’s over and done with. Yes, you’ll be down the money, but your merchant account will thank you.

Curious how to improve customer support? Firstly don’t outsource it! After that try opening up communication channels such as:

  • Phone – Answer calls quickly and have a refund policy ready.
  • Email – Automate receipt, and quickly get back with a human response.
  • Chat – Instant conversational responses that address their concerns.
  • Social Media – Comments and direct messages can be a unique form of outreach.
  • Respond To Reviews – Improve your Google listing and address issues at the same time.

Customer Support Tools

Companies like Kustomer and Zendesk offer customer service and engagement platforms that can help you streamline customer interactions and prevent chargebacks resulting from miscommunication or dissatisfaction. Find the right tools that work for you and make sure your business brand reflects good policies and friendly communication.

High Chargeback Merchant Account

Overall, high chargebacks can do more than just drain your profits, they can damage your merchant account . As a result, you may end up looking for a more sustainable solution that has greater leniency with high chargeback rates. Most payment processors draw the line at around 1%, but high risk merchant account providers give you more of a cushion.

Nonetheless, implement the above techniques and hedge the risk of further chargebacks to ensure your current and future merchant account are in a safe place from all of the potential, but preventable issues chargebacks cause.

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Lizzy joined the Zen Payments team following her graduation from Utah Valley University. As a dedicated customer service representative, she brings extensive experience in client relations and customer support. Lizzy is committed to delivering exceptional service to all Zen Payments clients.

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