The BluePay blog is running a series of articles about Chargebacks, those costly fees that can eat into a merchant’s bottom line. While avoiding chargebacks altogether is unlikely, there are steps merchant account holders can take to reduce your risk of incurring chargeback fees.
Cancellations and returns are a common reason for chargebacks. Doing your due diligence can help you avoid these common chargebacks.
Tips for Avoiding Chargebacks for Cancellations and Returns
Issue credit to the same account used to make the purchase. If a customer paid with a credit card, issue a credit to the same credit card. Don’t provide a refund in the form of cash, check or in-store merchandise, as we may not be able to recover the cost in the event of a chargeback.
Clearly communicate with customers about recurring transactions. Many cancellation chargebacks originate with customers who are not fully aware of the conditions for recurring billing. If a customer notifies you of a desire to cancel recurring service, cancel recurring billing immediately. Issue any credits in a timely manner.
Notify cardholders prior to billing. For domestic transactions, allow 10 days before billing a cardholder. For international transactions, provide 15 days for pre-notification. This allows cardholders time to cancel transactions if they desire.
Provide disclosure of your refund policy at the time of transaction. Make sure customers clearly understand your policies for returned merchandise. The words “NO EXCHANGE, NO REFUND,” should be clearly printed on your Sales Draft if that is your exchange and refund policy.
Ensure timely delivery of goods or services. Failure to promptly deliver goods or services can result in cancellations by the cardholder.
Taking a few simple steps at the point of transaction can help reduce your risk of incurring credit card chargeback fees. Attention to these details may seem tedious, but it’ll save you money in the end.