To reduce the number of chargeback’s or refunds, you must first understand its causes. Chargeback’s are the worst thing that can happen to an ecommerce merchant and it will lead to: a) high loss b) red mark in the credit history and c) Status of the Terminated Merchant File. Some drawbacks caused by chargeback’s are:

  • Every online merchant account provider will charge a fee called the “Chargeback Fee”. This is charged when any customer applies for a chargeback. It will cost you as much as $40 per chargeback. Too many chargeback’s will drain your bank account. Since, credit card fraud is the primary reason for chargeback’s, you will not get back your merchandise which is a double plenty for you.
  • An online merchant’s credit history is very important if he wants to have a good financial future. If you or your business has a bad credit history then you will not get a merchant account. You will not be able to get any loans or anything unless you set-right your credit history.
  • The terminated Merchant File or TMF status is given to you if your merchant account was terminated by the account provider because you abused the service. If your ecommerce business has numerous chargeback’s, crossing the permissible limits, then your merchant account will be terminated.

Therefore, chargeback’s cause too much inconvenience, several troubles and a bad reputation. Though the merchant proves that the chargeback was not his fault and also, wins the case, it will not go down well with his account providers. Also, this takes a lot of nerves and time. Because of this, the only option is: try and avoid chargeback’s as much as possible.

Credit Card Fraud is the primary reason for chargeback’s.

Other important reasons for chargeback’s are:

a)    The transaction is processed more than once. This mostly occurs due to an error in the shopping cart software. The order doubles when it is sent to the ecommerce merchant. To check this error, verify every double order by calling the cardholder.

b)    Customer did not receive the service or the merchandise. This occurs mostly because of shipping problems, client entry error and bugs in the shopping cart application. The best solution to this problem is to use a shipping method where the customer has to sign a confirmation document. Also, making sure that your shopping cart application is free from drugs.

c)     Incorrect amount processed. This is due to bugs in your shopping cart application. Online merchants must check the price tag associated with each product in the database and also make sure that the shopping cart application has no bugs in it.

d)    Transaction was not processed within time frames. This may happen because of server delay or shopping cart errors.

e)    Other issues related to the product or service. The service or the product is drastically different from what was shown or promised.

f)     Other issues regarding Credit Card or Transaction. The card has expired, incorrect transaction date and so on. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.