B2B chargebacks pose a serious threat to the bottom line of all B2B merchants. Not only are they time-consuming, but they also tend to be extremely expensive and reputationally damaging.
B2B chargebacks occur when disputes arise and transactions are reversed, resulting in potential financial losses and wasted time for merchants like yourself. They can be initiated by customers or card issuing banks and are often caused by issues such as non-delivery of goods, damaged items, or unauthorized purchases.
It’s important to take proactive measures to prevent chargebacks, such as implementing additional verification processes and promptly addressing customer concerns. Clear returns and refund policies, as well as transparent and professional communication with buyers, can also help mitigate the risks.
Let’s take a look at what you should do to significantly lower your chargebacks.
Key Takeaways:
- The B2B industry faces extremely costly chargebacks due to high-ticket goods/services and mostly card-not-present transactions
- B2B merchants should implement chargeback prevention alerts
- Chargeback management companies can significantly reduce your chargebacks
- CB-ALERT offers the advantage of reducing chargebacks, saving valuable time, and ensuring you’re up-to-date with the latest chargeback prevention strategies
- Ethoca and Verifi alerts should be implemented for B2b merchants
What Are B2B Chargebacks?
B2B chargebacks can lead to financial losses and damage to a business’s reputation. They occur when customers or card-issuing banks dispute purchases made in B2B transactions. Disputes can arise due to non-delivery of goods, damaged items, or unauthorized purchases. Dealing with chargebacks can be costly and time-consuming. It involves providing additional verification documents, addressing customer dissatisfaction, and engaging in dispute resolution processes.
To prevent B2B chargebacks, merchants should implement KYB/KYC processes, maintain clear returns/refund policies, and provide prompt and professional responses to buyer inquiries. Prioritizing transparency and effective communication can minimize the risk of chargebacks and protect business interests.
Why Are B2B Chargebacks So Expensive?
Here are some key reasons why B2B chargebacks can be expensive:
- High transaction values: B2B transactions often involve large sums of money, which means that chargebacks can result in significant financial losses for your business.
- Lengthy dispute resolution process: Unlike B2C chargebacks, B2B chargebacks can take a long time to resolve, leading to prolonged revenue loss and increased administrative costs.
- Additional fees and fines: Chargebacks often come with additional fees and fines imposed by payment processors or card networks, further adding to the financial burden.
- Damage to business reputation: Chargebacks can damage your business reputation and lead to a loss of trust from your customers and partners, potentially impacting future sales and partnerships.
- Increased operational costs: Dealing with chargebacks requires significant time and resources, including gathering evidence, responding to disputes, and implementing measures to prevent future occurrences.
Understanding these factors can help you take proactive measures to minimize the impact of chargebacks on your B2B business.
What Causes B2B Chargebacks?
B2B chargebacks can arise due to a range of factors. Customers might dispute charges when they perceive the product or service they’ve obtained as falsely advertised.
Additionally, chargebacks can transpire in cases where merchants fall short of delivering products or services punctually, leading to buyer discontent.
Moreover, certain buyers might initiate chargebacks in an attempt to obtain services at no cost, thereby imposing supplementary costs on merchants.
To mitigate chargeback risks, businesses need to swiftly and effectively tackle these concerns.
Customer Feels Product Or Service Was Falsey Advertised
When customers believe that the product or service they purchased was falsely advertised, they may be more inclined to initiate a chargeback. This can happen when the customer feels that the product or service needs to align with the claims made in the advertising or promotional materials.
It could be that the customer expected certain features or benefits that were not delivered as promised. In such cases, the customer may feel deceived or misled, leading them to dispute the transaction with their bank.
Merchant Didn’t Deliver In Time
Delivering products on time is crucial for maintaining customer satisfaction and reducing the risk of chargebacks. As a merchant, you are responsible for ensuring that the products or services you offer are delivered within the agreed-upon timeframe.
Please do so to avoid customer dissatisfaction and potential chargebacks. Customers who feel that their orders are delayed or not delivered as promised may initiate a chargeback to seek a refund or resolution. This can result in financial losses for your business, as chargebacks incur fees and can damage your reputation.
Buyer Attempted To Get Services For Free
To avoid getting caught in a sticky situation, watch out for buyers who try to get your valuable services for free.
It’s not uncommon for some buyers to attempt to take advantage of businesses by requesting services without the intention to pay. This can result in significant losses for your company.
To protect yourself, it’s important to implement strict policies and procedures when dealing with potential buyers. Screen customers thoroughly, verify their information, and consider obtaining upfront payments or deposits.
Additionally, clearly communicate your payment terms and expectations to ensure clarity.
How To Prevent Chargebacks For B2B
To prevent chargebacks for B2B transactions, follow these steps:
- Deploy Robust Fraud Prevention Tools: Strengthen your defenses against fraud using advanced tools such as 3DS2 authentication, RDR, and Ethoca/Verifi alerts.
- Optimize Merchant Descriptor: Make your company easily recognizable using an accurate merchant descriptor matching your online storefront name. This clarity helps prevent confusion and reduces the likelihood of chargebacks.
- Partner With CB-ALERT: Collaborate with CB-ALERT to proactively eliminate fraudsters and prevent chargebacks from occurring in the first place. Ensure Transparent Transaction Details: Communicate transaction specifics clearly to your customers, including the purchase details, pricing, and associated fees. Clarity minimizes the chances of chargebacks resulting from customer misunderstandings.
- Prioritize Refunds Over Chargebacks: In most cases, offering a refund is more cost-effective than dealing with a chargeback. Refunds also enhance the possibility of retaining the customer’s loyalty.
- Round-the-Clock Customer Service: Exceptional customer service is pivotal in combating chargebacks. Prompt and satisfactory resolution of customer issues can prevent disputes from escalating to chargebacks. Use Clear and Concise
- Billing Descriptors: Ensure that the billing descriptor on your customer’s credit card statement is easy to comprehend, reducing confusion and, subsequently, the likelihood of chargebacks.
- Maintain Accurate Records: Keep detailed records of all transactions, including customer contact information, order specifics, and any customer communication. This documentation can be invaluable in chargeback disputes. Employ
- Chargeback Monitoring Systems: Utilize chargeback alert systems to address and manage dispute cases promptly.
- Scrutinize Irregular Orders: Be vigilant about orders that deviate from the norm, such as transactions from unfamiliar countries or vast amounts. Investigate these cases to ensure accuracy and security.
Choose CB-ALERT For Chargeback Management
Now that you understand how to prevent chargebacks for B2B transactions, choosing the right solution for chargeback management is important.
That’s where CB-ALERT comes in. With CB-ALERT, you can effectively manage and dispute chargebacks, minimizing the impact on your business.
Our comprehensive chargeback management platform provides real-time alerts, allowing you to take immediate action when a chargeback is filed. CB-ALERT also offers robust reporting and analytics, giving you valuable insights into chargeback trends and patterns.
By using CB-ALERT, you can streamline your chargeback management process, increase your win rate, and reduce revenue loss.
Don’t let chargebacks disrupt your B2B operations – choose CB-ALERT for reliable and efficient chargeback management.