How Chargebacks Hurt Your Business

Elaine Bennett
April 26, 2020
422 Views

Taking credit card payments is probably a routine part of business for your company. It is very difficult to run a company these days without accepting this form of payment.

Unfortunately, there are some disadvantages to accepting credit cards. Mainly, it can be costly. Not only do you have to pay to process these payments but also there is a risk of chargebacks, which can be expensive.

What Are Chargebacks?

Chargebacks occur when a customer disputes a charge and request that the bank reverses it, according to Microsoft. When this happens, you must pay for the chargeback in addition to losing the money on the purchase.

A customer may request a chargeback for a variety of reasons, such as receiving the wrong product or not receiving the product, or because it was a duplicate charge. Customers also typically make the request when there is a fraud situation where someone else used their card without authorization.

You will pay a fee for every chargeback. You may also see an increase in your merchant fees. It is possible that if you have too many chargebacks, you will go on a blacklist where you cannot accept credit card payments anymore.

These ramifications will, obviously, lead to serious issues for your business. You will lose money and possibly lose customers. You have to find chargeback protection for merchants to help avoid such problems.

Fixing the Chargeback Situation

Reversing a chargeback is very difficult. You have to prove the cardholder’s claims are false with documented evidence. It is far easier to prevent them from occurring in the first place. You can work with a company, such as Ethoca, which specializes in helping businesses like yours avoid the pitfalls of chargebacks.

You also need to take steps in-house to reduce the chances of customers requesting chargebacks. It starts with creating detailed and clear policies that let customers know about your return process. You also need to ensure that you clearly define products, especially if you sell online. You want customers to know exactly what it is they are buying.

Be as transparent as possible in all dealings with your customers. Above all else, provide excellent customer service. Many times, a chargeback request occurs because the merchant did not resolve the issue for the customer. If you can handle it first, you can often stop the chargeback from occurring.

Protecting Your Business

Understanding and preventing chargebacks is something you have to do for your business success. If you do not stay on top of this issue, it can cause devastating consequences for your company

You may be interested

What Is The Best Free VPN?
Tech Updates
21 views
Tech Updates
21 views

What Is The Best Free VPN?

Dan McGaw - April 16, 2021

Virtual Private Network or VPN have occupied an important position in the lives of internet users. It has dozens of…

3 Key Considerations to Remember When Hiring a Market Research Company in Sydney
Technology
30 views
Technology
30 views

3 Key Considerations to Remember When Hiring a Market Research Company in Sydney

Dan McGaw - April 16, 2021

Sydney consistently ranks high in the Global and Asia Pacific hub for business.  This capital city in New South Wales…

Automotive Innovation: Repowering 4WD Engine Performance
Tech Updates
19 views
Tech Updates
19 views

Automotive Innovation: Repowering 4WD Engine Performance

Danish Meraj - April 16, 2021

The greatest modification that many four-wheel-drive lovers can make to a vehicle is improving engine performance. Nowadays, automotive technology is…