Say Goodbye to Chargeback Headaches: 7 Tips for Small Business Owners!
Melanie Cunningham
Business & Intellectual Property Attorney (Licensed in NY & NJ ) | Author | Supporting entrepreneurs thrive in business with effective legal solutions.
If you are new to business, this may be the first time you’ve heard of the term “chargeback”. Before we define it, just know that they can be a nightmare for small business owners. They not only result in lost revenue but also consume precious time and resources.
While often confused with a refund, a chargeback is different. A chargeback is a return of funds to a customer's card account after they dispute a card payment on their statement. A refund is a repayment of a sum of money.[1]
Some chargebacks are legitimate. But because of the lost revenue and time (and headache) it takes to address, small business owners would benefit from putting a strategy in place to deal with this potential ordeal.
Keep reading for 7 strategies to implement to prevent chargebacks.
1. CLEAR AND TRANSPARENT POLICIES
Start by establishing clear and transparent refund and return policies. Make sure these policies are easily accessible on your website, invoices, at the point-of-sale, contracts, and in any communication with customers. When customers know what to expect, they are less likely to initiate a chargeback without first seeking a resolution through your established channels.
2. DETAILED PRODUCT DESCRIPTIONS
Provide detailed and accurate product descriptions on your website. Include high-quality images and specifications to ensure that customers receive exactly what they expect. Do you provide services? Are you a coach or a consultant? Be careful to provide a clear scope of the work or project for which you are hired in your contract.
If you frequently receive questions about related services, and it’s not included in the package your client requested, it’s a good idea to also include what is not included in the contract. Misunderstandings about product details and what is and is not included in a service are common triggers for chargebacks.
3. EXCELLENT CLIENT EXPERIENCE/CUSTOMER SERVICE
Do not overpromise and under-deliver. You need to make sure that you can deliver the services that you claim you can deliver and on time. Selling products through your website or other selling platforms? Prioritize excellent customer service. Your phone number, email address, contact information, should not be a game of hide and seek. Address customer inquiries and concerns promptly and professionally. By resolving issues before they escalate to chargebacks, you can build trust and loyalty with your customers.
Also, if you offer subscription-based services or products, make it easy for customers to manage their subscriptions. Provide clear cancellation instructions and ensure that billing is transparent. For example, if you know the transaction will appear as a different name than the one you use for branding purposes, alert your clients (at the point of sale, on the invoice or receipt, and in your policies) what name will appear on their credit card statement. Unauthorized subscription charges can lead to chargebacks.
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4. RECORD KEEPING
Maintain detailed records of all transactions, including order confirmations, shipping details, and customer communications. If you provide services, use clear and complete contracts. This is not to say that every contract needs to be 20 pages long, but you want to make sure you are not deleting clauses you deem unimportant for brevity purposes. If you have a conversation about the issues with your client, make sure you follow up with an email to summarize the discussion. This documentation can be invaluable in disputing unwarranted chargebacks.
5. SECURE PAYMENT PROCESSING
Invest in secure payment processing systems. Ensure that your website is protected with SSL encryption and that your payment gateway is PCI compliant. This helps protect customer payment data, reducing the risk of unauthorized chargebacks due to security breaches.
6. DELIVERY CONFIRMATION
If you offer physical products, consider using delivery confirmation services such as tracking numbers or signature confirmation. This provides evidence that the product was delivered to the customer's specified address, making it harder for customers to claim non-receipt.
7. CHARGEBACK ALERTS AND PREVENTION SERVICES
Ask your payment processor about chargeback alerts and prevention services. These services can help you detect and prevent fraudulent chargebacks in real-time.
Chargebacks are not an inevitability in business, but since there is a new scam every day, you want to be prepared. As the saying goes, an ounce of prevention is worth a pound of cure. Implement the strategies now, not only for your financial bottom line, but also for the reputation of your small business. If you are not sure what you need, or how to create an effective system to manage these issues, reach out. We can help you! Contact Us.
[1] https://www.checkout.com/blog/chargebacks-vs-refunds#:~:text=The%20terms%20'chargeback'%2C%20',of%20a%20sum%20of%20money.
Cut Ties to Everything Holding You Back?? Join Our Entrepreneurial Mastermind Community | Founder, InstantlyRelevant.com | 1 Mil YouTube Subs | Podcast | Author | Keynote Speaker
1 年A very informative article! What advice would you give to businesses that have already faced chargebacks and are looking to recover from the impact they've had, Melanie Cunningham?
We help Small Businesses establish a strong online presence and attract more clients by offering professional, and responsive web designs | Founder of FleexStudio | UI/UX & Web Designer with 6+ years of experience
1 年Just came across this insightful piece on chargebacks - a term many new to business might not be familiar with. The impact of chargebacks goes beyond just lost revenue. Time and resources are equally at stake. If you're looking to safeguard your business, these 7 strategies are a must-read!
Transforming Chargebacks into Success Stories: Unleashing an 80% Success Rate, Personalized Excellence, and a Risk-Free Trial | Your Chargeback Wizard at Redshift Solutions
1 年How to handle chargebacks in ecommerce effectively when they do occur? Chargebacks can be a major headache for ecommerce businesses. They can lead to lost revenue, damaged reputations, and increased costs. But even if you do everything right, there will still be times when chargebacks happen. That's why it's important to know how to handle chargebacks effectively when they do occur. Redshift is a leading provider of ecommerce chargeback solutions. We help businesses of all sizes reduce chargebacks, win more disputes, and reduce the financial impact of chargebacks. Contact us today to learn more about how we can help you protect your business.
Founder & CEO @ ChargePay | Helping online businesses automatically contest and win chargebacks using AI | Trusted by 25000+ stores on Shopify
1 年These are great tips Melanie. Chargebacks truly can be such a hurdle to deal with but once you understand what's causing them, you can fix it out.
Community Engagement Professional | Employee Engagement | Development Specialist | Advocacy & Outreach
1 年Wow, this is a great article! Thank you for the insightful information. This opened my eyes and educated me on this topic; again ?? , thank you!