The Clearsale Blog

5 Ways Retailers Can Reduce Debit Card Chargebacks

5 Ways Retailers Can Reduce Debit Card Chargebacks

Every merchant knows what a hassle credit card chargebacks can be. They’re expensive. They’re time-consuming. They put a drain on resources. And they put a business’s reputation and credit card processing ability on the line.

It turns out debit card chargebacks aren’t much better.

Customers initiate most debit card chargebacks for the same reasons they do credit card chargebacks: A fraudster has made purchases using the card number or a customer wants a purchase reversed due to an issue with the merchant.

Because there’s never a good time for e-commerce merchants to be on the receiving end of a chargeback, retailers must take an active role in setting up the processes and implementing procedures that will help minimize them. Here are five ideas for getting started.

1. Encourage Refunds

When a customer feels like a transaction just hasn’t gone right, they often seek out a refund. And when it comes to getting that refund, they have two choices:

  • File a chargeback with the bank.
  • Ask for a refund from the merchant.

If a customer takes the chargeback route, it could take as long as 45 days to get their money back from the bank — and that’s if the bank rules in the customer’s favor.

Here’s why the refund approach can help merchants reduce their chargeback levels.

When customers make a debit card purchase, the full amount of the transaction is immediately withdrawn from the customer’s bank account. When a transaction goes wrong, the customer usually wants a faster return of funds to their account. And that means they’re more willing to contact and work with the merchant to arrange a refund.

Another incentive customers have to request a refund over filing a chargeback is that customers usually have an increased financial liability for fraudulent purchases made with a debit card. That means even if they file a dispute and are successful, they may still be ineligible to receive the full purchase price back from their bank. With a refund, they can recoup more of the purchase price.

For merchants, issuing a refund instead of representing a chargeback also means they avoid the time, effort and money that’s required to fight a chargeback — a fight that’s often a losing proposition on their end. Refunding a customer is also a gesture of goodwill that helps keep the merchant’s good online reputation intact.

2. Provide Top-Level Customer Service

When a merchant is known for its timely, friendly customer service, customers are more likely to contact the merchant directly to resolve an issue rather than heading straight to the issuing bank to file a chargeback. This gives merchants the opportunity to defuse the situation and avoid having a filed dispute raise their chargeback ratio.

Here are a few strategies merchants can implement to improve customer service and reduce their debit card chargeback risk:

  • Offer a variety of ways for customers to contact customer service, including emails, 24/7 customer service lines, chatbots, and text messages
  • Respond promptly to all customer service contacts and social media messages
  • Post customer service contact information on all website pages, email communications and order updates
  • Ensure customer service staff is trained and empowered to address and resolve customer questions and concerns

3. Have Clear Return, Refund and Exchange Policies in Place

Customers frequently turn to chargebacks as a way to help themselves to a refund if they’ve missed the return or exchange window on an order. But merchants who are clear and upfront — and even flexible — about their policies can encourage customers to avoid disputes and reach out when they have an issue with a purchase.

Merchants should ensure these policies are available from all product and checkout pages, and links to the policies should also be included in all customer correspondence.

4. Be Clear About Charges, Subscriptions and Authorization Amounts

Because the money in a debit card transaction comes out of the customer’s account immediately, customers don’t want to be surprised by any unexpected withdrawals. And if a withdrawal ends up being larger than the customer expected, that could be enough for a customer to file a chargeback.

Luckily, avoiding chargebacks can be simple with just a little communication.

If customers have enrolled in a subscription program or have other recurring billing charges, merchants should regularly notify customers about upcoming charges. Similarly, if customers make a purchase that requires an authorization hold (like a hotel room), ensure they know the total amount of the hold and how long the funds will be held. Providing this information can mean the difference between an unpleasant chargeback and an amicable transaction.

5. Get Help Managing Debit Card Chargebacks

The best defense against debit card chargebacks is a good offense — and that should consist of the same strategies merchants are already using to prevent credit card chargebacks. But even these strategies aren’t foolproof, and sometimes debit card chargebacks do happen.

That’s why you need to implement a solution that can help protect your business from the financial and reputational effects of fraud and chargebacks. But picking the right solution for your growing e-commerce store isn’t easy. That’s why the experts at ClearSale developed the Fraud Protection Buyers Guide. This easy-to-read, easy-to-use guide walks you through your available options and helps you confidently make the right decision for your business. Download it today, and start preventing debit card chargebacks from affecting your business.

ClearSale Fraud Protection Buyers Guide

You may also like

[Industry Focus] Fraud Risk Profile for Nutraceutical and Drug Retailers

[Industry Focus] Fraud Risk Profile for Nutraceutical and Drug Retailers

As people become more conscious of what they’re putting into their bodies, there’s been an increased demand for high-quality supplements and healthful food and beverages. The result has been a..

Is Your Chargeback Rate Accurate?

Is Your Chargeback Rate Accurate?

Reviewing your KPIs, you notice your chargeback rate looks low — just as you want it to. It’s staying well under that 1% threshold that would put you in danger of needing a high-risk merchant..

Have Chargeback Disputes Become Too Easy?

Have Chargeback Disputes Become Too Easy?

Online shopping is getting easier by the minute. Almost too easy. Customers can make purchases with a single click — and they can often return them with not much more effort. This convenience..

Evidence You’ll Need to Dispute a Chargeback

Evidence You’ll Need to Dispute a Chargeback

No merchant wants to see a chargeback dispute land in their laps, and with good reason. Not only are they expensive to fight (fees alone can top $75), but card networks tend to rule in the..

5 Ways Merchants Can Recover “Credit Card Declined” Sales

5 Ways Merchants Can Recover “Credit Card Declined” Sales

You’ve added detailed descriptions and photos to each of your product listings. Customers leave glowing reviews for your customer service and merchandise. You’ve even optimized the entire checkout..

How to Avoid Travel Industry Chargebacks

How to Avoid Travel Industry Chargebacks

The U.S. travel market was forecast to top $370 billion by the end of 2018 — representing a 5% growth over 2017. Disposable income, developing markets and increased curiosity are just three of the..

What Is the Visa Chargeback Monitoring Program?

What Is the Visa Chargeback Monitoring Program?

No e-commerce merchant wants to find themselves on the receiving end of chargebacks. They’re expensive, they’re time-consuming, and they can damage online reputations. Now, Visa has thrown a new..

The Ultimate Guide to Debit Card Chargebacks

The Ultimate Guide to Debit Card Chargebacks

Americans love debit cards for their simplicity: no debt, no monthly bills, and the ability to pay directly from their checking accounts anywhere payment cards are accepted (including online)...

How Retailers Can Prevent & Fight Debit Card Chargebacks

How Retailers Can Prevent & Fight Debit Card Chargebacks

Nearly every e-commerce merchant understands the risks of credit card chargebacks. They’re expensive, time-and effort-consuming, and potentially devastating to an online business. Many merchants..

Want to write
for our blog?

Please review our writers' guidelines
https://www2.clear.sale/press/clearsale-guest-blog-guidelines
and then email guestwriter@clear.sale with your pitch!

Subscribe to our blog