2020 has brought remarkable change to eCommerce. While many traditional business models are failing, eCommerce sales have seen exponential growth. However, according to McKinsey, the average rate of merchant chargebacks across all industries is rising 20% every year. And eCommerce sales are a chargeback minefield, as card-not-present payments are more susceptible to fraud and disputes.
While your eCommerce business can’t entirely prevent fraud, you should spare no effort in implementing best practices to ensure adequate fraud & chargeback defences. Your customers will thank you for it, too – good fraud prevention also protects their data and finances.
Your checklist to protect eCommerce sales
1) Write clear terms and conditions to ensure your customers understand you are not responsible for charges made by a third party.
In many cases, you can revoke a card number immediately and reinstate it only after customers have completed their purchase. You can also use a merchant account to protect your business and have some responsibility for losses. The actual liability lies with the merchant account provider, and you can gain greater protection through your merchant account. Being entirely open and honest about your policies can help your customers avoid misunderstandings and escalations, and it can also strengthen your case if you have to challenge a chargeback.
2) Leverage fraud prevention tools for your eCommerce sales.
Preventing chargebacks is one of the most effective and inexpensive ways to combat fraud. Whether you’re a retailer, business owner or software developer, you can add fraud prevention tools to your website today. Partnering with payment processors that leverage services like Ethoca from Mastercard and Verifi from Visa will offer the best protection through ‘prevention alerts’ – these will help merchants refund disputed transactions and avoid chargebacks. A timely notification of a disputed transaction means that a merchant can resolve it before the chargeback process starts, therefore enhancing the customer’s experience as well as reducing operational costs.
3) Understand your customers and determine common fraud patterns.
It all starts with understanding who is going to be boosting your eCommerce sales. Be mindful of your business model when you are designing your fraud prevention strategy. Start with your eCommerce vertical and business plan if you are trying to figure out what type of customers you are dealing with. Analyse your customer profiles for security risks and choose the right fraud prevention tools to address them. To complement this, use a payment processor that uses 3DS Secure authentication and risk management. Additionally, AML and fraud detection tools powered by Artificial Intelligence will significantly reduce your exposure to and liability for chargebacks.
4) Have a strong customer service team.
Your customer service team needs to be on top of all customer requests, making sure that all chargebacks are handled as quickly and efficiently as possible. Make sure your customers can easily reach your business and train your customer service team to make every effort to provide a satisfactory solution to their queries so that chargebacks can be easily avoided. Ask yourself these questions to ensure optimal customer service support: Why did the customer request a chargeback? How old is the chargeback? How long has the chargeback been pending? What is the history of the chargeback? If the business made a mistake, what was it? How is the customer impacted by the chargeback? What are the options for resolving this?
5) Offer a great customer experience for your eCommerce sales.
Post items in the promised timeframe, have a bank name that’s easily identifiable on your customer’s bank statements and keep your customers updated on the status of their order. Have a system in place to document the entire customer experience so if something doesn’t go according to plan, customers don’t have to explain their order history or past conversations every time they contact you. Don’t forget, a happy customer is one who will also provide you with positive reviews on Google or Trustpilot.
A high-quality chargeback management system protects against fraud, helps with chargeback disputes, saves lost revenue and allows you to approve valid claims. If the processes required to reduce chargebacks seem overwhelming, Trust Payments would be happy to help you navigate these challenges. We offer a full range of payment and customer loyalty solutions tailored to boost eCommerce sales for SMEs.