Avoiding Chargebacks: Costumer Service is King

In the age of Internet businesses, there are more and more credit cards transactions and that means more chances for chargebacks. Chargebacks, unfortunately, are an unavoidable occurrence and many small business owners find them not only a nuisance to dispute but also they can have a negative effect on cash flow and merchant rates. The more chargebacks that occur, the worse your credit card merchant rate will be, not to mention the fees that occur every time a customer charges back a purchase. But there are some ways to avoid the dreaded chargeback and they are easy to implement.

Most obviously but also most importantly, great customer service is the first defense against chargebacks. Sometimes customers will chargeback simply because they cannot find an easy way to contact a company’s customer service team. Have the contact information clear and easily found on your website. The next step is to answer any and all inquiries within a day or two.  Try to resolve any problems the costumer might be having by offering solutions. Sometimes the questions might be as simple making it clear what exactly the customer was charged for.

This might happen in cases where the customer simply does not recognize the company’s name on their credit card statement. This can happen when the billing descriptor—the way a company’s name appears on a customer’s credit card statement—differs from the business name. An easy way to deter this kind of chargeback is to reference the business name or the website URL in the billing descriptor. Also, make sure phone number is listed next to the company name so that customers can call if they have a question about a charge. Finally, if the billing descriptor and the business name do differ, advise customers on their receipts from where they can expect a charge.

Another great way to help avoid chargebacks (and also to dispute them later) is to display the return policy. Many big businesses print their return policies on the receipt. Also make sure that the webpage where the policy is listed is easily found and easy to understand.

Even with the clearest policies and the best customer service, chargebacks do happen. The best way to deal with them is to keep good records—preferably written (i.e. email) if possible. If a chargeback happens–and you choose to dispute it—provide plenty of proof to support your claim. Remember to act in a business-like manor both to the credit card company and to the customer. When properly prepared, a company can deter many possible chargebacks. And remember, good customer service can go a long way.