Offense is the Best Defense – Why you need to plan for Chargebacks ahead
Running a successful business online is about much more than hard work and discipline. Between marketing, fulfillment, customer service and more, you need good financial management if you ever want to succeed. Chargeback prevention is an important piece of the puzzle.
Not only do they eat away at your profits, high chargeback ratios will create severe issues with your merchant accounts. If left untreated, it could result in the loss of your accounts altogether.
In order to prevent problems, you need to understand chargebacks, understand root cause, and most importantly develop a good relationship with a payment processing partner.
The importance of chargeback prevention?
If you are not familiar with what exactly a chargeback is, we’ll simplify it for you. Ever have a transaction on your bank statement you were unfamiliar with? Ever have a problem with a purchase you made, or service you received that does not get resolved after speaking to the business? What do you do next? For most, they call their Bank. When a consumer contacts their bank regarding an issue or problem with a recent transaction, a dispute is filed. This process is known as a Chargeback.
You may be wondering, what’s the big deal? Very few consumers know just how big of an impact this process has to a business. When a chargeback is filed, not only does the bank debit the funds of the original sale out of their account, but they are also issued an additional fee and penalized by their processing bank.
While chargebacks are designed to protect consumers, they are often used dishonestly. They may also be the result of technical errors in your payment processing system. Common reasons for chargeback include fraud, defective goods, shipping errors, unauthorized credit card transactions, technical problems, and human error. Along with reducing errors and supporting customers, it’s just as important to work with a payment processing partner to help manage your chargebacks. Not only will it save you time and money, it will minimize any potential issues that may affect your merchant accounts.
Essential features in a chargeback management system
Whether you’re a startup, small business or global corporation, managing chargebacks is an important issue that often times is overlooked. As technology expands and fraud becomes more common, integration between merchants and payment systems is more critical than ever. Look for a system that will not only track and respond to your chargebacks, but also provides value, data and insight into why you are receiving chargebacks.
Manage your own business first
Like always, it’s important to take stock of your own business first. Flexible refund policies, reliable customer service and a quality fulfillment process will help to avoid chargeback risks. High-quality goods and services will also help to keep chargebacks low and your customers happy. Follow up periodically with your vendors and partners, to ensure you stay on top of any potential issues, such as delays in shipping or staffing in support.
Work with a payment processing partner
Running your business well is not the only factor to consider. A solid relationship with a reliable payment service provider who knows their way around is also necessary. For example, it’s possible to prevent many chargeback issues through real-time alerts, anti-fraud technology and other automated processes.
Professional fraud prevention and automated chargeback solutions can save a tremendous amount of money, reduce the risk of penalties, and ultimately help your business to grow. But you don’t know what you don’t know, and not all solutions are created equal. Whether you operate a brick-and-mortar location or an online store, having someone in your corner to protect your financial interests is worth its weight in gold.
Here are a few things to keep in mind, when choosing your payment processing and chargeback management team:
- Usability and accessibility
- Ongoing support and account management
- Integration with customer relationship management (CRM) systems
- Smart automated processes
- The ability to work with United States and global merchants
- Multi chargeback prevention and management tools
While some chargebacks are inevitable, being proactive is better than reactive. Prevention systems will bring issues to your attention immediately and help you to manage disputes efficiently and effectively.
Explore a relationship with Pinpoint today. As a trusted payment processing partner and former frontrunner in fraud and chargeback management, we have the tools to keep your business successful.