Designed to protect consumers against fraudsters deducting money from their accounts, chargebacks have become part and parcel of every company’s day-to-day operations. However, they cost businesses significant sums of money, thereby biting into their bottom lines. It is estimated that more than $40 billion of sales per annum are subjected to chargebacks.
For these reasons, any company should be working to avoid chargebacks. These transaction reversals are common among recurring merchants, and here is what they should be doing about them:
Understanding the principle of recurring charges
When companies offer recurring or subscription-style billing, transactions are generated automatically, with the amount being deducted from the customer’s credit card or bank account.
There are several advantages to this business model, including customer retention and additional secured revenue. However, these same subscription fees can become a nightmare for companies that experience many chargebacks. How can they be avoided?
Make canceling easier
Many customers opt for a chargeback because it is quicker than navigating your site to cancel their subscription or recurring payment. Although you do not want them to cancel, making it a cumbersome process only further aggravate the client.
When they go onto their banking app and trigger a chargeback with one or two clicks, you can blame only yourself. Ensure that your website’s cancelation options are accessible as a cancelation is preferable to a chargeback.
Choose a suitable chargeback solution
Prevention is better than cure, and putting sound systems in place can reduce chargebacks and fraud. This takes a team of experts and using an industry-leading chargeback management company like Accertify allows you to focus on other core aspects of the business.
By having specialists onboard, you can preempt the need for fighting chargebacks, which is costly and time-consuming. Authorities tend to favor consumers as the chargeback concept was designed to protect them, and winning a dispute is an uphill battle for the merchant.
Keep in touch
Another common gripe that leads to chargebacks on recurring billing or subscriptions is that customers cannot contact the merchant to resolve queries. When it seems impossible to get a customer service agent’s assistance, a client will trigger a chargeback to stop the transaction. This might not have been their original intention, but they decide to follow this route because they cannot get answers to questions about the service.
Outstanding and responsive customer service will reduce the number of chargebacks a company experiences. Few people have ages to spend on hold, and providing other options, such as submitting an email query, callback services, or online chat, makes a significant difference.
Clarify refunds and returns
By law, online merchants must publish their refund and return policies on their websites. However, few people take enough time to read them. This can lead to misunderstandings about timeframes or conditions under which such transactions may take place. Customers then trigger a chargeback even though the merchant is in the right.
Provide a summary of refunds and returns policies minus the legalese on your checkout page. Insist that customers tick a box saying that they understand the terms and conditions before they pay.
Adjust pricing structures
Sometimes people will use chargebacks to cancel services because they can no longer afford it. However, when your company offers tiered pricing, that client is more likely to go onto its site and select a cheaper payment plan. This is a better alternative to chargebacks or full cancelations.
Most companies offer three plans that dictate services provided. People are inclined to start with the middle one and upgrade if they are happy or downgrade if they are having problems honoring their financial commitment.