As a company owner, your focus is always on the ins and outs of what makes your company successful. Your clients, the inner workings of your business, and your employees are where the focus lies. You’ve worked hard to get your business to where it is, which is why chargebacks are a sensitive topic.
A chargeback happens when a customer disputes a transaction on their debit or credit card. If the dispute is successful, the card issuer will deduct the funds from the merchant account and return them to the customer.
This can become demoralising for the merchant, as what once was a hard-earned sale becomes a loss. Becoming educated on chargebacks will help mitigate them in the future.
Why do chargebacks happen?
Chargebacks can arise because of fraud, customer disputes and merchant error to name a few.
Fraudulent criminal activity is always a threat to businesses, and the rise in cybercriminal activity is a concern. This is especially worrisome as the shift to online transacting becomes more prevalent in our ever-evolving technological society. Fraud occurs simply when these offenders obtain the credentials of legitimate card users and make unauthorised purchases with the stolen credentials. Even though the merchant still provided the services or sale that was paid for by these criminals, the cardholder is protected. Thus, a chargeback.
This, however, leads to a different type of fraud. ‘Friendly’ fraud is when a customer knowingly files a chargeback for products or services that they paid for. Buyers regret will lead the customer to request a chargeback, abusing their rights and knowingly deceiving the company. This, in many ways, is more heinous than criminal fraud, and the word ‘friendly’ is thoroughly misleading.
Something we can’t get past is simple miscommunication. Merchants are often guilty of being vague about their offerings and this leads to confusion on the customers’ part. Sometimes, something as simple as the real business name on to appear on the customer statement will prevent a chargeback. The customer could also be the one to blame, not communicating with other members of their family who made the purchase before requesting a chargeback.
Even though chargebacks are generally a negative term for merchants, they exist to protect customers both from fraud and from dishonest merchants. In our imperfect world, there are some companies which look to take advantage of consumers. The chargeback process ultimately helps everyone involved in the buying process by enforcing fairness whenever transactions are made.
Help with mitigating chargebacks
Your merchant account provider should have layers of security ensuring you never see an unnecessary chargeback. Criminal fraud can be prevented, and the right payment processor will help you on your way to fraud-free transacting.
Octapay has state-of-the-art security and layers upon layers of built-in fraud protection designed to alleviate chargebacks. Our number one priority is our merchant. We keep your protection at the top of our priority list, so as you can go back to paying attention to what matters most in your business.