Chargebacks can happen for any number of reasons. Many of us can relate to the experience of not getting quite what we expected when buying a product online. Maybe it’s damaged, or maybe it never even showed up. When a customer contacts their credit card issuer and demands their money back, the credit card issuer reverses the transaction and fines the merchant. This is called a chargeback.
Two weeks ago we posted a few tips on how to reduce your chargeback ratio, but you may never be able to reduce it to zero. We do what we can to avoid chargebacks by encouraging customers to contact us directly with billing questions and we list our contact information on their credit card statements and purchase confirmation pages. However, despite our best efforts, chargebacks still happen. If you are on the receiving end of a chargeback, we are more than happy to help you resolve it and (hopefully) get your money back.
The costs of chargebacks to you:
- Loss of product.
- Loss of shipping costs.
- A chargeback fee charged to a merchant that can exceed 75 USD.
- Potential reputational damage.
- Depending on the credit card provider’s policy, potential loss of your merchant account or ability to accept a certain type of card.
On top of these losses, statistics show that 41% of online fraud comes from chargebacks, so disputing a chargeback is often a wise decision. However, a chargeback dispute requires substantially more work to resolve than a regular customer inquiry because the customer has decided to formally question the charges with their credit card company instead of contacting you or DalPay directly. The four common types of chargebacks are:
· DNEF: The customer says that he/she didn’t authorize this transaction or purchase anything through DalPay.
· NRCT: The customer says that he/she has not received their purchase.
· REFP: The customer says that they returned the merchandise, or that you agreed to issue a refund on this order.
· DMER: The customer says that their purchase was either defective, damaged, or not received as advertised.
How to resolve a chargeback
- Check the validity of the chargeback
First things first – is it possible that the chargeback is your fault? Consider the information provided by the customer. If they are claiming a DNEF chargeback, perhaps the transaction is fraudulent – the customer’s card or information could have been stolen, in which case the chargeback is valid and perhaps you should consider adding new security features such as two-step authentication for credit card payments in the future. In this case the chargeback will stand and you will have to absorb the losses.
DMER chargeback are common when a merchant doesn’t adequately describe a product on their web store. This is why it’s important to provide as much relevant information as possible about all of your products to ensure that the customer receives exactly what they want. If your description of a product doesn’t match up with reality, chargebacks will be inevitable. You also need to ensure that you’re packaging fragile products adequately and securely so they aren’t damaged during delivery.
- Check with the customer
In every case, the best thing that you can do is get in touch with the customer. The chargeback may be the result of confusion; the customer may not recognize DalPay as the processor or they may not recognize the charge labelled “dalpay.is” on their credit card bill. It’s possible that the customer forgot that they made the purchase or that it was made by a family member without their knowledge.
You should always offer a hassle-free, user-friendly method for returns and refunds to avoid REFP chargebacks. If the customer has filed a REFP chargeback but you have not agreed to refund the order, you should contact the customer to clarify whether the chargeback was a mistake.
- Check with the courier
You should always be shipping your merchandise with a trusted courier that provides package tracking services and requires a signature from the recipient of each delivery. For NRCT or DMER chargebacks, the courier can determine whether the package has reached the customer or not and whether there is a possibility the package was damaged.
If the package has been delayed, contact the customer to reassure them that the package is still on its way and ask them to reverse the chargeback with their bank, although at this point they may want to cancel their order. It’s also possible the package was lost or stolen during shipment, in which case the chargeback would stand but the courier may be able to reimburse you.
The customer could be attempting to defraud you by receiving the product without having to pay for it. In this case a courier that requires proof of receipt can allow you to identify whether a customer is lying about not having received the product. A customer claiming the package has arrived damage could also be lying, so ask for proof such as a photograph of the damaged product.
- Check with the card issuer
If you haven’t been able to resolve the chargeback dispute with the customer but you believe that the chargeback is invalid, you can appeal to the issuing bank. The issuing bank sides with the merchants an average of 40% of the time and reverses the chargeback. If the bank chooses in favour of the customer, you will have to absorb the cost of the chargeback – it’s one of the unfortunate costs of running a business.
DalPay can also appeal to the issuing bank for you. The success rate and duration of the process can vary greatly depending on the case and the particular issuing bank. If you have additional information that may help in disputing a chargeback, please provide it to us as soon as you receive the chargeback to ensure that it is included in the dispute claim. If the chargeback is successfully disputed, the returned funds will be deposited to your account.
At DalPay, we’re committed to providing you with the tools for success. We’re always happy to answer your customers’ billing questions and we will do everything we can to help you to prevent and dispute chargebacks. Remember that we’re here for you – if you need additional help in preventing or dealing with chargebacks, feel free reach out to a member of our team.