Credit card chargebacks are a costly reality for online merchants. Chargebacks represent a loss to online merchants’ bottom line, especially if they occur on a consistent basis. For that reason alone, it’s critical to keep chargebacks to a minimum. However, it is not just about the chargeback itself and the financial consequences that can occur. Online merchants must also consider the negative impact on the customer experience and how chargebacks can impact their relationship with credit card processing companies. For instance, too many chargebacks can affect your ability to work with credit card processing companies, affecting the payment options in place for customers. Therefore, it’s important to understand how to avoid chargebacks, what they are, why they occur, how to manage them.
What is a Chargeback and Why Does it Occur?
Online merchants can face chargebacks for many reasons, initiated by the merchant, bank or by the cardholder. One of the most frequent examples of chargebacks is when a purchase has supposedly been made by a customer but is actually a fraudster who has entered another person’s payment credentials. In this case, the victim whose bank card has been used for the fraudulent payments will file a claim to have the illegally withdrawn funds returned. When this happens, the bank initiates a chargeback to the merchant after receiving documentation from cardholders that the specific transactions were fraudulent. In addition to the reversal of fraudulent payments, online merchants are assessed an additional fee by their own processing banks.
How to Avoid Chargebacks?
Chargebacks can be a costly nuisance for merchants operating in the card, not present space. While chargeback cases can be won, it’s important that merchants understand the many ways chargebacks can occur and the cost incurred by frequent disputes. Thankfully, there are preventative solutions and tools to reduce chargebacks, benefiting not just the merchant’s bottom line but the overall customer experience.
Stay on top of fraud trends and new risk schemes as well as chargeback reduction techniques with Acuitytec.
Our solutions allow your business to safely grow, raising efficiency, and increase profitability by reducing risk and operational costs.
Acuitytec Merchant Accounts Feature to avoid chargebacks
Real-Time Risk Scoring and Fraud Alerts:
- Automate transactions rejection based on high score threshold and targeted risk alerts
- Risk setting evolves with traffic patterns and trends
- Tiered warning levels, frequency setup, notification type and recipients list
- Custom rule sets based on evolving business needs and product suite, with over 900 parameters
- Review account holder details such as full name, address, phone number and email address attached to the bank account and match it against profile information
- Track activity and acceptance rates from card level and type, with the ability to create actions based on decline codes
- Avoid refunds and compensations
- Sticky feature option for repeat customers – option to by-pass verification queries on repeat customers with same information, thereby reducing costs
- Automated know your customer (KYC) process
- Global engine database optimized and oriented to transactions, users and account associations
- Minimize user interaction
Global and Local Databases:
- Identify high risk in and outside of your network
- Set trust levels while effectively managing your customer’s data
- Negative and White List Databases
- Reporting and analytics
- Risk pattern assessments
- Traffic and rules monitoring
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