Chargebacks are among the most common problems online businesses face, and this problem has a large number of pretty nasty consequences, which is why preventing chargebacks is so important. Certainly, the best way to reduce the number of disputes that are resolved in chargebacks is by means of chargeback prevention services, but which one to choose? Today, we will talk about choosing the right chargeback prevention service for your business.
What Is a Chargeback?
First of all, we need to understand what a chargeback is. So, to put it simply, a chargeback is the procedure of refunding a customer after a dispute. At first sight, it seems like a pretty good feature aimed at protecting customers, yet fraudsters often abuse chargebacks to scam businesses. Apart from that, even if a merchant wins a dispute, in many cases, dispute fees are still charged. Finally, chargeback fraud is not only committed by cyber criminals; unintentional friendly fraud is more common than most business owners believe. In any case, all types of chargebacks must be prevented, and we will explain why this is so important in the following paragraph.
Chargebacks Dangers
As we have already mentioned above, a chargeback is not a good thing for any merchant, but why is it so? Let’s take a brief look at the main dangers of chargebacks.
- Revenue loss. Chargebacks are one of the most common reasons for revenue losses since merchants often must refund customers without getting their product back or after providing certain services.
- Penalties and fees. Merchants are obliged to cover dispute fees and, in some cases, costly penalties. In fact, on average, due to fees and penalties, a chargeback ends up costing a merchant 2-2,5 times more than the amount of the initial charge.
- Reputation damage. Too many chargebacks have a negative effect on the reputation of your business, and card-issuing banks may add your business accounts to blacklists, therefore depriving you of sales and profit.
- Deterioration of relationships with payment processors. Payment processing companies prefer to cooperate with trustworthy companies, and too many chargebacks may lead to the deterioration of relationships with your payment processors or even losing them.
Chargebacks cause a lot of unpleasant consequences for merchants, which is why business owners must prevent them, and we will discuss how to do that in the following paragraph.
Tips on Selecting the Right Chargeback Prevention Service
You might have already guessed that the best way to protect your business against chargebacks is by using a reliable chargeback prevention system. But how to choose the very system that will work best for your business? Well, here are some tips you want to keep in mind:
- Consider getting chargeback prevention alerts within a CRM. Your chargeback prevention service must be compatible with your CRM system, which is why we recommend selecting CRM software that cooperates with chargeback prevention alert companies and offers those within its system (for an additional fee); for example, Germius is one of such CRM systems.
- Pay attention to AI tools. Modem chargeback prevention alerts usually have AI tools for real-time monitoring of fraud and chargebacks that efficiently help reduce the rate of both. Such alerts like Ethoca or Verifi offer AI tools.
- Take a look at the features list. Before purchasing any service, pay attention to its features list. It must have such functionality as advanced fraud detection, real-time transaction monitoring, dispute management, and customer support.
- Make sure the system is scalable. You have to choose a service that will be able to grow with your business and handle the increased workload without compromising performance.
- Browse the reviews. Lastly, take a look at the actual users’ reviews to see what pitfalls a particular system might have.
These tips are simple, yet they will no doubt help you select the very chargeback prevention system that will work best for your business.
Final Word
Preventing chargebacks is crucially important for online businesses of all sizes and types. So, we hope that now you know how to select the right prevention system for your business and you are finally ready to take action in your fight with chargebacks.
