In some instances, as a credit or debit card user, you might have encountered the word "chargeback". However, what does this word really mean? In simple terms, a chargeback is a transaction reversal that usually transpires when a customer disputes a charge on their account. There are various grounds that may have caused a chargeback, such as in a case of fraud, non-delivery of goods or services, or a billing error.
When a customer initiates a chargeback, the card issuer will investigate the customers' claim and decide whether to refund the transaction. If the chargeback is successful, the merchant or the business that processed the transaction will be obliged to refund the disputed amount, and the funds will be deducted from their account.
Chargebacks can be a frustrating and stressful experience for merchants as these may lead to losses in revenue, additional fees, and could possibly taint business' reputation. On the other side, chargebacks are a protective measure for consumers, as they provide a way to dispute unauthorized or fraudulent charges.
What are the common reasons why customers file chargebacks?
1. Fraudulent Transactions
One of the most prevalent grounds for a chargeback is due to fraudulent activity on a customer's account. For instance, an unauthorized person gains access to a customer's credit card information and makes illegitimate purchases. As the customer reviews their transactions and notices fraudulent charges on their statement, they have the option to initiate a chargeback to get their money back.
2. Non-Delivery of Goods or Services
Non-delivery of goods or services can either pertain to the orders of a product bought online that never arrives or for a service that has not been fulfilled (such as a music festival ticket that was canceled due to external factors). The unfulfillment of the said goods or services can instigate customers to file a chargeback to refund the amount spent for the transaction.
3. Billing Errors
There are some cases where a chargeback occurs due to a billing error. A common example mostly experienced by customers is being charged twice for the same transaction. In such a case, customers can initiate a chargeback to get the duplicate charge reversed.
What should merchants do about this?
Regardless of the reason behind chargebacks, it is imperative that merchants take immediate action to the dispute. It is highly recommended for merchants to have a clear list of policies in handling chargebacks and document transaction records (such as receipts or billing information and shipping information) to support their case.
Merchants should mitigate the risk of chargebacks through diligently verifying the information of customers, ensuring that goods and services have been delivered on time, and providing clear and accurate billing information.
In a nutshell, chargebacks are an essential tool for consumers to protect themselves from fraudulent transactions. On the other hand, managing chargebacks and disputes can be an overwhelming experience for merchants.
Thus, as a merchant it’s important to find your perfect match when it comes to intercepting chargebacks with Chargeblast - your companion in obliterating dispute rates, a guaranteed solution for chargeback reduction, and will support your business’ growth.
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