Chargebacks are an essential part of any business. Consumers have a list of reasons they can use to request their money back. This process is very long and undesirable, and it is doubly unpleasant if fraudsters are behind it. In this article, you will learn why you should minimize the number of chargebacks and how alert services like Ethoca can help you with it.
If a buyer’s request for a chargeback is approved, then all the costs associated with the return are borne by a merchant. And you will have to spend an order of magnitude more than the client has paid. It is since the full amount of the payment is debited from your account. Add to the latter the commission for carrying out this procedure (up to 4%), penalties for the approved chargeback, and the difference in exchange rates if the bill and payment were of different currencies. If the ratio of such returns to total sales exceeds the acceptable level (more than 1%), it can lead to a loss of reputation, customers, and your account suspension or closure.
Although it is a legal right of a buyer to claim chargebacks, various frauds can use it for their own purposes. The easiest option is to demand money without returning the goods. They can use the same reasons as other dissatisfied customers, such as the inadequate quality of an ordered product or the wrong purchase. It is important to recognize such unreliable customers on time and resolve the issue before a chargeback is confirmed.
How Can Alert Services Help?
There are measures to prevent chargebacks and fraudulent activities against any business. You can make detailed and understandable product descriptions on your company’s website so that all visitors understand what they are dealing with. You should also thoroughly screen customers for past suspicious activity and use 3D Secure technology for additional verification. To avoid controversy, be polite to the clients and train your staff to communicate correctly with customers.
Another effective way to prevent fraudulent activities is to use alert services. They notify their clients (merchants) that one of their buyers has requested a chargeback. Since the entire verification procedure can take quite a long time (not less than a month), you have enough time to resolve a possible conflict directly with the client and save yourself from chargebacks. If you do not use such alert systems, you will know that the customer has requested a chargeback after issuers and an acquiring bank has reviewed their application. You simply will not have time to resolve the dispute; you will have to return the full payment amount.
Typically, these alert services, including Ethoca, have an extensive network of partners (banks, issuers, and merchants) that are linked. It allows all participants in this system to respond to a problem and take appropriate action quickly. Having received information about a chargeback, you consider it and decide what to do with it. If you agree with the listed reasons, you can offer a buyer a refund or not interfere with the return procedure. If you suspect fraud, you can stop shipping a product or service before it reaches the customer.
Alert Services to Protect Your Business
Alert services are an effective way to resolve disputes with unsatisfied customers quickly. They allow you to react to any situation on time, which in the end, has a positive effect on your reputation and helps to retain your customer base. Such systems work when a chargeback has already been requested. However, business owners need to know how to avoid such situations altogether or minimize their percentage and take appropriate actions and measures to protect their business.