How to prevent chargebacks as policy changes to support customers

November 23, 2017

Looking at how to prevent chargebacks in a firm but fair manner is one of the biggest problems facing retailers across the globe today.

Of course, if a consumer has a valid complaint to make and is getting nowhere in their quest for compensation then a chargeback is often a necessary and essential option for people if they have been unfairly treated.

A culture of ‘friendly fraud’ is on the rise across the world though; the issuing of a chargeback as the first port of call for what may be an incredibly minor dispute. Something which hits retailers harder than most shoppers may realise.

Chargeback fraud is increasing by an astonishing 41% year-on-year. That figure could be set to rise too, with banks and financial apps investing in technology that makes issuing a chargeback easier than ever before.

Why it’s so necessary to prevent chargebacks

A lot of major card issuers now allow card holders to file charge disputes online and through their apps, including Capital One, Citibank and Wells Fargo.

While shoppers can’t claim a chargeback through an app for American Express, Discover and Chase, they can still do so through their websites, with the technology widely expected to roll out for these providers and others sooner rather than later.

The reasons are simple: to attract more customers through that ease of use and advertise it as a way for shoppers to better fight fraudulent card activity through a couple of clicks of a button on an app.

While great for shoppers, the system can open itself up to abuse that retailers foot the bill for. They can get marked as a risk from their financial provider if they receive too many chargeback requests, receive penalties, lose sales and lose merchandise, too, for each and every fraudulent chargeback request.

That means that retailers have to be more vigilant than ever and work to prevent chargebacks before they even occur. Chargebacks can be complicated to resolve though; as necessary as it is to scrutinise each and every one, do you really have the time to dedicate alongside the running of your business?

Prevent chargebacks by embracing new systems

Businesses of all shapes and sizes can work to prevent chargebacks right now by working alongside a company as committed to their growth as they are to revolutionise their payment systems and address areas of the business that need improving to exponentially reduce the amount of chargebacks they may receive.

That can go as deeply as tackling fraudulent behaviour by criminals to more simple chargeback requests such as shoppers who are feeling the pinch of buyer’s remorse. A chargeback should only ever be a last resort, and the more upfront, transparent, open and easier the communications shoppers have with a company, the less likely one will occur.

No one business is ever the same, and even though banks are using technology to make chargeback requests easier than ever before, working with the right company able to modernise your financial structure can be the best way possible for brands to prevent chargebacks.

Fibonatix can help safeguard businesses looking to grow against fraudulent chargebacks, keeping more of their profits in their pocket. We can also offer payments charges at 1.5% compared against PayPal’s 3.5% – contact us for more information.