Chargeback

Definition “Chargeback”

The term chargeback refers to the cancellation of a purchase made in a digital business using a credit or debit card. There are two situations in which a chargeback occurs: when the cardholder does not acknowledge the purchase, which is a strong indication of theft or fraud; or when the transaction does not meet the standards set out in the contract, membership terms or company policies. In practice, after a sale, the business owner finds that the card company has invalidated the client. Therefore, the value in the sales spreadsheet is cancelled or not posted at all.

Who pays for the chargeback and how do you deal with mistrust in the digital market?

The responsibility for the risk of the online transaction lies with the e-commerce company, digital manufacturer or affiliate. An interesting fact about chargeback is that it basically reverses common sense. Many people do not shop online because they are suspicious of security systems. This is because the increase in fraud shows that bad faith is possible on both sides. Mutual distrust is justified because the online user has no face, but is merely a number. In the physical environment, a doubt can be easily resolved. In the virtual environment, this identification is much more difficult. What the entrepreneur can do is to be aware of the legitimacy of online sales and use chargeback protection tools. This requires further research and attention, but it is important to avoid losses and hassles.

Ways to prevent chargeback

Although credit card companies do not disclose data on the percentage and chargeback values, it can be assumed that the number is high.

In order not to be part of these statistics, some measures can be taken:

• Enable payment with the bank receipt: Even if it seems a bit archaic, using the good old bank receipt is still a secure form of transaction for both the company and the customer. The voucher can be paid physically or over the internet, making it a little easier to complete. This option also opens up the possibility for people who have no or limited credit card restrictions to buy or subscribe to their products or services. However, it is always important to remember that the entrepreneur is taking a risk, as the customer might forget to pay the bill or even cancel it.

• Use of credit analysis tools: The use of credit analysis tools is very common in retail and is also a good alternative for digital trade. Although this use comes at a cost to the business, it can help avoid chargeback cases and also bring more collateral to forward transactions.

• Payment facilitation: Another effective way to prevent chargebacks is to use payment facilitation services, which act as guarantees for virtual purchases. There are several services of this type that require customer registration and account verification in addition to suspension of sales in suspicious cases. This type of mechanism entails fees that need to be identified within the sale.

• Banking model: Banks are undoubtedly the biggest victims of fraud on the internet. And for this reason, they have developed great control and security systems. This is a path that digital entrepreneurs can and should follow, for example by using verification codes via token or SMS, the use of apps and other validation mechanisms.

Information on security criteria of an online sale

Chargeback can be a nightmare for digital entrepreneurs, but it also affects customers, because in the climate of mistrust created by recurring scams, everyone loses. A good solution is to offer a special section on the company’s sales page that deals with the issue of security. In addition, it would also be helpful to provide relevant information on transaction security and similar topics.

Conclusion: Chargeback is about customer satisfaction and credibility

Despite the challenges still faced by those selling over the internet, the number of consumers shopping online is growing. Every year. The evolution of security systems and the creation of new validation mechanisms make for an optimistic forecast. Entrepreneurs need to protect their customers, listen to them and provide excellent service. The popularity of e-commerce has brought many business opportunities. On the other hand, online transactions still create insecurity among customers and digital entrepreneurs, as there are unfortunately many cases of fraud. But to increase sales and grow businesses, it is important to invest in security methods. This way, the company gains credibility in the market and avoids possible losses.