eCommerce Basics: How To Reduce Chargebacks

Customer making a chargeback claim

In our last article, we went through the chargeback process and how chargebacks can affect your business. While chargebacks are indeed a pain, the good news is there are plenty of ways you can effectively reduce them.

What are the most common reasons behind chargebacks?

Although intended to protect your customers, the chargeback process can be manipulated for fraudulent purposes. Sometimes chargebacks can also arise as the result of a genuine  misunderstanding of what your customer had to pay or expected to receive. Some of the most common reasons behind chargebacks include:

  • Friendly Fraud – Don’t let its name deceive you, this type of fraud is caused by ‘Buyer’s Remorse’ after your customer decides to claim that they didn’t receive their order.
  • Criminal Fraud – If a stolen card is used to make an online purchase, the genuine cardholder will try to reclaim the funds used by the fraudster.
  • Customer Disputes – This includes customers believing the goods or services were falsely advertised.

 

How can merchants reduce chargebacks?

So, we’ve already covered the fact that chargebacks can be time-consuming, expensive and not something to look forward to. But what can you actually do to combat them? There are several ways you can reduce your volume of chargebacks including:

3D Secure Authentication

3D Secure, also referred as 3DS, is an effective tool used for preventing friendly fraud. It’s basically an extra layer of security for online transactions. For the benefit of protecting both your customers and your business, you’ll want to use a Payment Gateway that supports this form of authentication.

For more information on how 3DS affects your customers’ experience, be sure to check our latest infographic on What SCA Means For Your Customers.

Accept multiple currencies

Price ambiguity and confusion for your customers can be caused when currency conversions or international transactions fees are unexpectedly applied to their purchase. By accepting a wider range of currencies on your ecommerce store, you can ensure your pricing is clear and concise. That means a better experience for your customers and less chargebacks for you to worry about.

Take a look at our previous article explaining the importance of accepting multiple currencies from a customer experience perspective and the benefits it can provide when you are looking to attract new customers from abroad.

Provide clear and concise product descriptions

Sometimes chargebacks can be raised if customers feel your goods or services are falsely advertised. This may just be down to a simple misunderstanding caused by how the item has been described. When presenting items for sale online you should:

  • Clearly explain what the product does and how it should be used (avoid making any vague claims that are unrealistic)
  • Use high quality images (blurry product images might conceal certain aspects of their designs)
  • Include all relevant information (such as size, colour, weight and material)
Offer free trials (that really are free)

If you offer your customers a free-trial of your product or service, you should consider not asking for their payment information when they sign up. Although it may feel like a missed opportunity, a 2020 report suggests that only 1% of consumers actually read the terms and conditions. If your customers forget to cancel their trial before it expires, they are likely to raise a chargeback if they have been automatically enrolled into a recurring payment plan. Whenever you’re advertising free trials, be clear and transparent to your customers about what happens once they come to an end.

Want to know more?

For more tips on growing your ecommerce business, search #PixxlesPowerUps. Watch our ecommerce video guides here or visit our resources page to read more helpful blogs.