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How to minimise chargeback anxiety in four easy steps

Andrea Dunlop tells us her tips for safeguarding your business against the risk of excessive chargebacks not just at Christmas, but all year round.

As the winter season approaches, businesses around the world are preparing to take advantage of consumers’ festive cheer to boost their sales and increase profit margins.

For many experienced merchants, however, the exciting prospect of high sales volumes at this time of year is tempered by the knowledge that they may also be hit by chargebacks, which often spike during peak shopping periods.

These chargebacks can be genuine disputes, from account holders who are victims of payment fraud, or who are not happy with other aspects of the transaction. Claims can also be cases of so-called “friendly fraud”, where account holders purchase a product from a retailer, then pretend the item never arrived in order to be refunded the money.

Understandably, these chargebacks can be the source of a lot of anxiety for merchants – each must be dealt with on an individual basis, making them a time-consuming headache for a company’s dispute teams. Moreover, upheld claims can be costly, putting a big dent in a retailer’s profits.

So how can merchants protect themselves from chargebacks this festive season? And how can they mitigate the impact of disputes on their time and money? Here are four easy steps to help you ensure your business has the chargebacks infrastructure in place to make disputes as hassle-free as possible:

1.       Authenticate without adding friction

A key goal for many merchants is to make the checkout experience as quick and smooth as possible for consumers – the less friction in the payment process, the lower the risk of shopping cart abandonment and the higher the conversion rate.

However, to achieve this friction-free, many merchants compromise on the payment verification process designed to ensure consumers have properly signed off on a purchase before it goes ahead. Removing these security layers can result in spikes in chargeback disputes – both fraudulent and genuine – as consumers can say they don’t recognise the transaction.

With this in mind, it’s important to strike a balance between seamless payments and security by streamlining the input process for payment data, while also introducing straightforward multi-factor authentication.

Solutions like tokenisation are ideal for cutting down the payment process for repeat customers. This encrypts payment data behind a “token”, allowing merchants to store customer details securely for future purchases. As a result, customers can simply log in to their account, call up the card they want to use and just verify the payment with a password or CVC number – no need to input a long card number.

You should talk to your payment service provider (PSP) about the tools they have available to help you reconcile friction-free shopping with optimum authentication to minimise the risk of “transaction not recognised” chargeback claims.

2.       Check your payment systems are at peak performance

A common reason why a consumer may make a chargeback claim is due to a “processing error”, which has resulted in an accidental purchase, a product not arriving or a double payment. Indeed, this is one of the four “dispute condition” categories in Visa’s new chargeback regime.

With this in mind, it’s all the more important to make sure your payment systems are in tip top condition ahead of the festive period to minimise the risk of processing errors that could spur consumers to make chargeback claims.

You can avoid these issues by working with your PSP to boost the capacity of your payment systems now, so you can handle hundreds or thousands of payments simultaneously without worrying about errors creeping in. They can also support you in stress-testing your payment software, and its links with issuers and acquirers, to make sure there is no risk of problems like double-payment.

3.       Optimise your fraud management systems

Preventing customer and business fraud can go a long way towards minimising the risk of chargebacks either through friendly fraud or payment fraud. Above all, it’s important to undertake appropriate risk assessments to identify the weak points in your payment system, and to determine how best to protect customer data to minimise the risk of any problems.

Many PSPs now offer guidance and support in achieving these goals. Paysafe, for example, offers state-of-the-art fraud management solutions for customers, including cutting-edge fraud prevention tools, a robust and customisable Risk Rules Engine, as well as a dedicated Risk team that is always on-hand to answer your enquiries.

With this kind of help, you can ensure your business is safeguarded against any and all fraud risk that could result in excessive chargeback claims.

4.       Get support with chargeback claims

Even merchants with the best systems in place for preventing chargebacks still receive disputes from consumers from time to time. It’s important to make sure you are prepared to handle each and every case quickly and efficiently to minimise the time and financial cost to your business.

You should ask your PSP about the support it offers to deal with claims. Paysafe, for instance, has a Smart Dispute system that can help you automate the process for dealing with chargeback disputes – this not only eases the burden on your team, it also ensures that the deadlines imposed by credit card companies are met, minimising the risk of claims being upheld simply because you didn’t address them on time.

Time to prepare

The Festive shopping period is still a few weeks away, but it’s important that you are prepared now to make sure everything goes off without a hitch.

Taking these steps can help you ensure your business is ready and able to minimise the damage of excessive chargebacks this winter. Remember, if you need any advice or guidance on getting the best systems in place for the specific needs of your business, talk to your PSP.

If you want to learn more about what Paysafe can do to protect your business from chargebacks, visit our website.