Three years ago, we wrote about 7 ways to avoid chargebacks on your merchant account. Since then, the payments space has evolved significantly. While many of those tips are still applicable, we’ve updated our best practices to evolve with industry guidelines and to reflect what we’ve observed to be the most effective defense against disputes.
Chargebacks can be an annoyance, but they can also have serious impacts on your bottom line. They can cause adverse actions to be taken against your merchant account by card brands. While it’s impossible to prevent chargebacks entirely, there are steps that you can proactively take to significantly reduce their frequency. Here are our updated tips to assist you in preventing disputes:
1. Use a recognizable descriptor
The descriptor is the name that appears on your customers’ credit card statements. If the descriptor for your business doesn’t match your website’s name, it’s possible that your customer may not recognize their purchase from your business on their statement. It’s always preferable to use your DBA instead of your legal name as your descriptor as that’s more likely to be recognized on the cardholder’s statement. If you have questions about your descriptor or need to make adjustments, please contact our Support team.
2. Be accessible
If a well-intentioned customer needs to contact your business but can’t find your contact information, or cannot reach you in a reasonable amount of time, they could become frustrated and issue a chargeback. Your best defense is to make sure that your contact information is prominently displayed on your website. If a customer can easily reach you, there’s a higher likelihood that you’ll be able to work out their potential issues directly and avoid a dispute.
3. Be upfront
Another common cause of chargebacks is when the description on a merchant’s website doesn’t adequately describe the product that the customer receives. Make sure that your website has detailed and thorough descriptions of your products so that your customers know what they’re getting. Include as many images as possible with your product descriptions so that customers have a visual representation of their purchase. If you provide a SaaS service, make sure that you provide a complete list of the features and functionality so that your customers know what to expect.
4. Make sure your subscriptions are ‘opt-in’
If you offer a free trial period before starting a subscription or recurring billing service, always make sure that your customers have the option to not sign up for the paid service. Automatically subscribing customers to a paid service at the end of a free trial, also known as “negative option billing,” leads to a poor customer experience and many possible disputes. It’s helpful to collect the customer’s payment information when they sign up for the free trial, but you should always be transparent about when and how much they’ll be charged if they decide to continue with your service. Customers need to feel like they have a choice in signing up, and will feel misled if they’re unexpectedly charged for something they thought was free or that would be automatically be canceled.
5. Provide your service or product as soon as possible
Promptly shipping your products or providing your service is a great way to avoid potential issues. If a customer doesn’t receive their product or service in a reasonable or expected time, they may lose confidence in your business and issue a chargeback. If you provide a physical product, the best option is to provide your customers with tracking details as soon as their items ship. If there are unforeseen issues with the delivery or shipments of their goods or services, be as upfront as possible about the problem and provide an expected resolution date.
6. Provide refunds
In today’s customer service oriented world, if a cardholder isn’t satisfied with what they’ve received, their credit card companies are positioned to help them find a solution to their issue if your business won’t. The most effective way to prevent chargebacks in the first place is to provide your customers with easy and efficient refunds. Even though it may feel as though you’ll lose revenue if you offer refunds, the best solution is to keep the customer happy and avoid disputes and negative online reviews.
We know that disputes can be challenging, so we’re always here to help. If you have questions about disputes or would like further suggestions on how to prevent chargebacks, contact us as firstname.lastname@example.org.