Take a hard line on retail chargebacks

A chargeback is a charge that’s returned to a debit or credit card after a customer successfully disputes an item on their account statement. They might dispute a charge for any number of reasons:

• They’ve been charged for items they didn’t receive;
• They’ve been charged mistakenly because of a technical issue;
• Product returns, defective items or maybe a reservation or service has been cancelled;
• You might have accidentally duplicated a charge; or
• Their card information has been compromised and they’ve been hit with a fraudulent charge.

Dealing with a disputed charge can be tedious and testing. It takes time to trace a payment in your reporting systems, while also trying to assuage your customer – who might no longer have their proof of purchase. You’ll typically be charged a fee from the card issuer when a chargeback happens.

Chargebacks are more common in card-not-present (CNP) transactions, but some general rules apply to both CNP and in-store sales.

Customer service: encourage customers to resolve disputes with you personally, rather than through the chargeback process, by including your contact details on receipts. (This also goes for CNP transactions, although these may only be fully secured with 3-D Secure – we’ll elaborate in the next section). But always ask for receipts and proof that goods were indeed damaged, if that’s the issue at hand.

• 3-D Secure 2.0: for online payments, the latest 3-D Secure transaction authentication means more secure transactions and better protection from fraud chargebacks.
• Address Verification Service: this fraud-reduction service lets you verify a cardholder’s address before completing a sale. Always get the cardholder’s billing address and ensure it’s a full match.
• Content is king: describe your products clearly on your website, so customers won't have reason to return them. The same for return/refund policies and delivery: state when they can expect their items, the cost of delivery and how they can track purchases.
• Trading name: make sure your business’ trading name matches what appears on customers’ bank statements.
• CVV2/CVC2 security: use these codes on credit and debit cards as an additional security check.
• Avoid CNP transactions: instead, send a payment link generated by your payments provider to the customer by text or email for a safe, speedy sale.