What are chargebacks and why do they happen?

Chargebacks can be very costly for a merchant. Hence, to prevent it you should know what they are and why do they happen?



What are chargebacks?

In simple words, they happen when a consumer disputes a charge on his bill.

Some of the reasons they dispute it are given below:

  • Double billing
  • Unsatisfied with the product or service they have received
  • The customer fails to recognize the business name
  • Fraud activity such as an unauthorized purchase or identity theft.

Why do they happen?

Usually, transactions are given 4 months from when they take place to dispute a charge. The procedure starts when the issuing bank issues a dispute code.

So, the merchant’s bank stops the fund and the customer receives a refund. In short, the sale is reversed.

After this happens, it is the responsibility of the merchant to accept or fight the chargeback. According to the reason for the chargeback, the merchant showcases evidence in their favor to the credit card company.

If they decide in the favor of the merchant, the customer is charged a second time and the amount is credited to the merchant again.

How can a merchant prevent chargebacks?

Some of the ways to prevent chargebacks are given below:

Respond faster: When a merchant fails to respond to a chargeback instantly, banks just issue the chargeback.

Simple return policies: Customers should understand the return policy of the company well.

You should also offer them a good customer support system to address their queries and complaints immediately as they may choose a chargeback if their complaints are unaddressed.

Use CVV/ CVC codes: Ask for the CVV/ CVC code of the cardholder to ensure that the card is physically present with the customer and they have not stolen the information.

Talk to your clients: Speak to your customers to find out the status of their purchase. It will lower the chances of a dispute.

Though chargebacks are a problem for merchants, you do have various different ways to prevent them with the help of the best chargeback sites.

Make sure you put good policies and help your business avoid these chargebacks leading to happy customers and better sales.

Hello, I am a housewife and love my family. Also love to write on my blog when i am free.

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