E-Commerce chargebacks are something most online merchants face as they grow their businesses. So how they handle them is essential to how far they make it in the internet world.
E-Commerce chargebacks are rampant as most transactions are card-not-present. There’s also a significant fraud problem that is plaguing the e-commerce world.
If you’re experiencing chargebacks to your internet business, looking to learn how to win chargeback disputes, and looking for a reputable chargeback prevention company, you’ve come to the right place. This article will break down everything you need to know about e-commerce chargebacks.
Before we get into the meat and potatoes, let’s break down the basics.
- Ethoca and Verifi chargeback alerts can significantly help you fight chargebacks.
- Chargebacks destroy your bottom line.
- Too many e-Commerce chargebacks can result in the termination of your account.
- All e-commerce merchants can benefit from fraud prevention tools such as CB-ALERT.
What Is An Online Payment Chargeback?
In online payments, chargebacks can occur when a customer initiates a dispute through their credit card issuer or bank, alleging that they did not authorize a particular transaction or received goods or services that did not meet their expectations.
Example: A customer orders an item from Amazon and feels duped when they receive an item that is not up to their standards. They then call the bank and file a chargeback.
The credit card issuer or bank will then investigate the dispute and may decide to refund the customer’s money to their account. If the merchant cannot provide sufficient evidence to refute the customer’s claim, the chargeback may be granted, and the merchant may be required to return the funds to the customer.
On top of returning funds to the customer, the bank/processor will also charge a fee for the chargeback.
This is detrimental to a merchant because your account is frozen or terminated once you exceed your chargeback threshold.
Reasons For E-Commerce Chargebacks
- Affiliate Fraud: This occurs when affiliate marketers encourage fraudulent transactions to raise revenue before a merchant notices.
- Fulfillment Issues: Packaging problems, shipping problems, or failed deliveries can all anger a customer, leading to a chargeback.
- No Customer Service: Poor customer service goes hand in hand with chargebacks.
- Quality Issues: The product was defective or not as described.
- Dissatisfaction: The customer is simply unhappy with their purchases.
By implementing CB-ALERT, we can help you with these issues in real-time. If you want to reduce your chargebacks significantly, fill out the application below.
How To Prevent E-Commerce Chargebacks
Here are some common steps all e-commerce merchants should take to mitigate chargebacks.
- Use robust fraud prevention tools: Implementing tools such as 3DS2 authentication, RDR, and chargeback alerts.
- Use a merchant descriptor: You are making your company more recognizable on a statement by using an accurate merchant descriptor. Make sure that your descriptor name matches your online storefront name.
- Partner with CB-ALERT: At CB-ALERT, we specialize in helping eCommerce merchants stamp out fraudsters before it even begins.
- Clearly communicate transaction details: Make sure your customers understand exactly what they are purchasing, including the price and associated fees.
- Provide excellent customer service: Respond promptly to customer inquiries and resolve issues promptly and satisfactorily. This can help to prevent chargebacks due to customer dissatisfaction.
- Issue a refund: In almost every case, a refund will cost you less than a chargeback. Refunds also give you a better chance of bringing the customer back.
- Use clear and concise billing descriptors: Make sure that the descriptor on your customer’s credit card statement is clear and easy to understand so that they are less likely to initiate a chargeback due to confusion.
- Keep accurate records: Maintain detailed records of all transactions, including customer contact information, order details, and any communication with the customer. This can be helpful in the event of a chargeback dispute.
- Monitor and address chargebacks: Use chargeback alert systems to monitor for chargebacks and address them promptly. This can help to prevent chargebacks from becoming a more significant problem.
- Scrutinize Irregular Orders: If you notice an order come in from another country that you typically don’t see or if the amount is far greater than usual, look into it to ensure its accurate.
Subscriptions: Online subscriptions are susceptible to friendly fraud perhaps more than anything other transaction. When customers forget to cancel their free trial and are billed, they often panic and call their bank for a chargeback.
To avoid this, make sure it is straightforward to cancel; also, send them reminder emails that their trial will expire.
Implementing Customer Service To Prevent Chargebacks
Implementing 24/7 customer service might be expensive early on for a business, but with this being said, it’s one of the most important things you can do as a merchant. By doing this, you can communicate with the frustrated customer and, at the very least, offer them a refund.
Calculating E-Commerce Chargebacks
Understanding how to calculate your chargebacks is essential to know you can stay under the chargeback threshold.
To calculate the chargeback rate, you can use this formula:
Chargeback Rate = Total monthly chargebacks divided by total monthly transactions.
Preventing Shopify Chargebacks
Shopify is one of the most popular e-commerce platforms available. If you’re running an eCommerce store on Shopify, you can review their terms for chargebacks here.
Can Chargeback Mitigation Companies Help?
The short answer is yes, chargeback mitigation companies can significantly help reduce your chargebacks.
Chargeback mitigation companies can help lower chargebacks by providing various services designed to prevent chargebacks from occurring in the first place.
These can include fraud prevention tools and services, such as 3DS2 authentication, RDR, Order Insight, advanced fraud analytics, and chargeback alert systems, such as Ethoca, that can help merchants identify and address chargebacks before they occur.
Chargeback mitigation companies can also assist merchants with the chargeback dispute process, allowing them to build strong cases and increase their chances of winning chargeback disputes.
How Long Do E-Commerce Chargeback Disputes Take?
The typical chargeback dispute time varies between 1 and 3 months, depending on the card network and how much evidence is brought forward.
Why Choose CB-ALERT To Help Stamp Out E-Commerce Fraud?
E-Commerce related chargebacks can ruin a company’s finances quickly. At CB-ALERT, our mission is to help you free up your time and take care of the heavy lifting that chargebacks are.
With over two decades of experience in the space, we can help grow your business and be a vital piece of the puzzle. Below are some of the things we bring at CB-ALERT:
- Alerts in real-time Ethoca and Verifi
- 24/7 customer service
- Transparent pricing
- Gateway/CRM agnostic
Please fill out the application below to find out how much CB-ALERT can improve your business when it comes to ending eCommerce chargebacks.