The Startup Magazine Things to Keep in Mind Ahead of Chargeback Season

The holidays approach and that means many businesses are going to enjoy a holiday sales bump. While chargebacks are a serious threat all year round, holiday sales often lead to an increase in chargebacks in December, January, and February. Fortunately, there are steps you can take to mitigate them, but proper preparation is a must.

Setup a Dispute Management Platform

If you haven’t set up a chargeback and dispute management platform, it’s crucial that you do so before the holidays. These platforms make it easier to deflect, track, and manage disputes when they arise. Your staff will likely be stretched thin during the holidays and the weeks after, so anything that can ease burdens can go a long way.

Make Returns Easy

Many chargebacks from the holidays result from customers struggling to return unwanted purchases and gifts. As a merchant, you probably want to reduce returns. However, if you make your return process too expensive or cumbersome, or if you simply flat-out refuse to accept returns, cardholders may turn to their bank and use chargebacks. With a chargeback, a customer can claw their money back. So make sure you accept returns and that the entire process is relatively easy and doesn’t result in hefty fees. 

One strategy that can be effective for reducing returns is actually to offer a longer return period. If you insist that customers must make returns by say January 7th, they will be under pressure and will have to make their decision quickly. If you instead extend the return period until the end of February, many customers will decide to keep the product after they have more time to think things through. Zappos and other companies have effectively used long return periods to reduce returns.

Watch Out for Fraud

Unfortunately, fraudsters often use the holiday season to strike. They know that with customers making more purchases, cardholders may be more likely to miss fraudulent transactions. They also know that merchants and their payment departments will be busy processing orders and returns. This can help criminals sneak through unauthorized transactions.

Unfortunately, such fraudulent activities tend to result in chargebacks. Once a customer realizes that they were targeted by criminals, they may turn to their bank to get their money back. Chargebacks are an especially grave threat because not only could you lose the revenue from the sale, but you will also have to pay chargeback fees. Further, your chargeback ratio will rise, which could result in increased fees for processing all of your transactions (not just those that result in chargebacks).

When possible, you want to identify suspicious transactions and block them. If the purchase is being sent to a weird shipping address or is coming from an odd IP address (say from out of country), you may want to pause the transaction until you confirm that it’s legitimate. Doing so could save you from chargebacks and other hassles. You can also protect your customers and brand.

Chargeback alerts are another effective way to deflect chargebacks. With these alerts, a bank can alert you of a pending chargeback. If the transaction was clearly fraudulent or you otherwise are likely to lose the chargeback dispute, you can offer the customer a refund. You will lose revenue, but you can also prevent chargeback fees and protect your chargeback ratio.

Make Sure Your Customer Service Department is Responsive

One of the best things you can do to ward off chargebacks is to have a responsive customer service department. During the holidays and afterward, your customer service reps will be under a lot of pressure, so you’ll want to provide extra resources if possible. You might bring on seasonal help or outsource some of the work. You can also set up AI-powered chatbots to handle some of the work and you should provide your reps with tools like dispute management platforms, such as ChargebackHelp.

It’s crucial for your employees to understand the threat of fraud, chargebacks, and other risks. That way, they will know what to keep an eye out for. When a customer does get in touch, you want to start the conversation quickly. Even if you can’t resolve their issue right then and there, if they know you are serious about looking into it, they might give you time. This can help prevent chargebacks and other disputes.

Ultimately, merchants should plan ahead when it comes to chargeback season. The right steps now may result in significantly better outcomes. By using various tools, like chargeback dispute management platforms, and fully leveraging your customer service department, you may be able to prevent and fight chargebacks.

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