Chargeback and How to Deal with it

Handling chargeback is not so bad if you break it not manageable bits. Just got another frustrating chargeback?

Are you tired of losing every dispute?chargeback

Well, just take a moment and go through some of the recommendations we have when dealing with a chargeback. Before we get into the details, first things first, what is chargeback and what makes it so elusive?

What are Chargebacks?

A chargeback is simply a refund made when a disputed item on a transaction report is deemed erroneous. Chargebacks occur in transactions surrounding credit cards, debit cards, and even bank statements.
It mainly affects the merchants, funds are usually pulled from the merchant’s account and back to the issuer’s account. The main idea behind chargebacks is to help the customer avert fraudulent merchants from exploiting innocent customers.

 

What causes Chargebacks?

They can occur due to several reasons. Chargebacks are just another form of refund since the money goes back to the purchaser. Some of the issues that lead to disputes that result to chargebacks include;
When the purchaser receives goods and makes a claim to the company that the goods are not as described. This is done once the goods are received. When the cardholder does not recognize the transaction or what the bank statement relates to, then a chargeback is likely to be made. Fraud charges, for example, a stolen credit card may result to a dispute. Other disputes include admin error; where the bill is duplicated and charged more than once.
That said, there are some steps you can take to handle chargebacks. Here are some measures you can take to handle chargebacks.

Identifying the source

When the chargebacks are processed, the issuer attaches a reason code. Generally, these codes are meant to explain the reason for the reversal of the transaction, however, the e-commerce has grown and these reason codes have become unreliable. Any reason can now be used to mitigate a friendly fraud. Since a chargeback is mainly caused by either a fraud, product mismatch or double billing, a merchant needs to pinpoint the reason for the dispute.
Intelligent Source Detection (ISD) is a groundbreaking technology used to precisely nip the cause of the reversal. Courtesy of the integration human forensic expertise and software ISD reveals the “real” reason and the process of handling unnecessary chargebacks begins.

Handling the Chargeback

More than 90% of chargebacks occur due to “friendly fraud”. The number is astounding can be disheartening to any merchant. While you cannot fully handle the chargebacks that arise from criminal fraud and merchant error, you can handle chargebacks from “friendly frauds”.
Once you handle a chargeback there are several things that might come from it. The banks or Credit Card Company will pay more attention to your chargeback claims in the future. This means you will have more due diligence in case of chargeback disputes. Moreover, a fully settled chargeback in your favor will discourage friendly fraud in the future.

How to avoid Chargebacks

Chargeback prevention is not an easy feat since criminal frauds and merchant frauds are still tricky to counter. What you can do is seal the friendly fraud holes airtight and avoid similar incidents in the future. Majority of the merchant’s errors are a result of minute vulnerabilities in the terms and policies statement.
A closer inspection of your policies will help avert such contingencies to your business. There are some common practices that fraudulent cardholders use to perform a chargeback. These practices that inadvertently cause chargeback can be resolved by careful scrutiny of the polices statement by a professional.

Conclusion

Unlike a voided-charge which is a charge that is yet to be settled, a chargeback is a refund that has passed several entities before being fully settled. Therefore, chargebacks can take up to several business days before being processed by the entities involved. Remember, a chargeback can also be issued by the merchant if the customer returns the goods within the allowable return period. If chargebacks are becoming a nuisance then it’s about time you took a move.