Chargebacks are unavoidable fact of life whenever a merchant accepts card payments, and they occur when a cardholder, or their issuing bank, raises a payment dispute for a transaction. There are many reasons why a cardholder or issuer may raise a Chargeback, but the most common ones are listed below.

Fraud-related Chargebacks

Disputes can be categorised as fraud given the following reasons:

  • The cardholder does not recognise the transaction.
  • The cardholder did not authorise the charge on their card.

Non-fraud related Chargebacks

Cardholders can dispute their genuine transactions with the given reasons:

  • Cardholder was charged twice on the same transaction
  • Goods or services were not received or defective
  • Cardholder is still getting charged after requesting to cancel recurring payments
  • Goods or services received are not as described

Preventing Chargeback losses

There are many ways you can implement processes that ensure your business is as resilient as possible to Chargebacks. Here are a few of our own tips on protecting your business.

Have and communicate a clear refund policy that is available to view on your website

This holds even if your policy is simply “no refunds”. This also ensures that your customers know how to request a refund instead of file a Chargeback. Make it easy for your users to contact support so that they can quickly raise their concerns with the platform instead of going to their issuing bank to file a Chargeback.

Clearly state your Terms and Conditions

  • Require your users to tick a box to accept Terms and Conditions upon sign up.
  • Require your users to tick a box to accept Terms and Conditions upon payment.

Log the following transaction details on your platform:

  • transaction date and time
  • transaction description
  • transaction amount
  • buyer’s and seller’s names
  • payment information (such as method or card used)

In addition, ensure that your platform captures the following:

  • user login history
  • user email addresses
  • user IP addresses on login and payment
  • correspondence (email, letter or text message) between your business and your users, or between users

Ensure that your platform provides, or enforces, the following:

  • sales agreements
  • signed proof of receipt of merchandise or services delivered
  • documents to prove that service has been rendered
  • merchant rebuttal proving that services / goods rendered
  • invoice or documentation showing that the goods or services purchased by the cardholder matched what was described
  • documentation to support that the merchandise is not counterfeit
  • documentation to prove that the terms of sale of the merchandise or services were not misrepresented.

Promptly resolve customer disputes before they have a chance to escalate to a Chargeback

There are some disputes that you just can't seem to win, but the quicker you respond to them, the better chance you will have at resolving them before they result in a Chargeback.

Use a recognisable soft descriptor

Use the business or company name most recognised by your customers to avoid confusion about what the transaction is for.

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