How to Avoid Getting Tripped at the Transaction Finish Line

Credit Card Chargebacks - What You Need to Know
Speak up and let people know what it is that is impacting your ability to be and do your best. A bold statement for sure, but one that many of us would benefit from heeding. To get ahead, you need to take some risks and speak up when you have new ideas or don’t agree with your colleagues. This is particularly important when looking at how you do business. Just because you’ve always done it one way, doesn’t mean it is the best way.
Think, for example, of how you do or don’t communicate with your issuers. If you’re like most merchants, there isn’t a clear line of open communication with your issuers. In fact, you may only communicate when discussing the painful aspects of doing business, specifically when reviewing your chargeback fees.
Reduce and Eliminate Chargeback Fees
Each chargeback you receive comes with an additional cost––the chargeback fee. This fee is levied against you regardless of the outcome of the chargeback process. Win or lose, you’re charged a fee by your issuer. This fee is designed to help cover the costs the issuer incurs when dealing with customer chargebacks.
The more chargebacks you receive, the higher your chargeback fees; and when your chargeback ratio is too high, your ability to do business with issuers becomes prohibitive.
One of the best ways you can protect your business and eliminate the costs of chargeback fees is to speak up and open the lines of communication with your issuer and customers. Typically, the chargeback process follows these lengthy steps:

  1. The customer contacts the issuer to dispute a credit card charge.
  2. The issuer refunds the money and contacts the merchant.
  3. The merchant can choose to dispute or accept the chargeback.
  4. The merchant is charged a chargeback fee by the issuer, regardless of the outcome of the chargeback.

With the standard chargeback process, you are contacted too late in the process. By the time you’ve been contacted and alerted of the chargeback, the issuer has already spent time and money dealing with the customer and the chargeback. This translates into issuing the chargeback fee and other penalties.
Now, imagine if you were alerted to the chargeback at the same time as the issuer. This chargeback process now looks something like this:

  1. The customer contacts the issuer to dispute a credit card charge. The merchant is automatically contacted.
  2. The merchant communicates openly with the customer.
  3. The chargeback is resolved between the customer and merchant.

As you can see, with this updated chargeback process, the issuer is not actively involved. Now, you’re communicating directly with your customers. When you’re able to communicate directly with your customers, it’s much easier for you to solve the problems that customers are facing, ultimately preventing the chargeback from occurring.
The Customer’s Perspective
Fraud aside, customers often contact their issuer because they’re confused about a charge on their credit card. Now, with hacking, credit card theft, and identify theft in the news, customers are on high alert for unauthorized transactions.
By communicating directly with your customers for when they are concerned about a credit card charge, you’re able to assuage their concerns and learn how to better improve your billing. Often, taking the small step of improving the descriptors and details included with the charge can eliminate customer concern and confusion.
This all adds up to reduced chargebacks and ultimately the reduction of chargeback fees. One small change in how you communicate with your customers and issuers can have huge payoffs for everyone involved.
Your customers are happy to have their concerns dealt with quickly and easily. Issuers are relieved to no longer be directly involved in the traditional lengthy and costly chargeback process. You eliminate the time and costs of dealing with chargebacks, keep your customers happy, and eliminate chargebacks and chargeback fees.
All this comes from speaking up and changing the chargeback process. Be actively involved in changing how customers, merchants, and issuers communicate and work together. Remember, the traditional process is not always the best process.