Credit Card Processing Blog
How Can You Avoid Chargebacks?

Jan 19, 2016 12:34 PM / by Reliance Star

A chargeback is basically a form of customer protection which allows the customer to report fraud transactions on their statements. When the complaint is made, the card issuer investigates. If the issuer finds the complaint to be true, the customer has refunded their money and the merchant is charged the amount and chargeback fees. When the complaint is found untrue, the merchant does not have to pay the amount but may have to pay processing fees associated with the chargeback. As a merchant, you should be aware of all the things that can hurt your business so you can avoid them. Here are some reasons why chargebacks occur:

  • One of the most expected reasons for chargebacks would be fraud. This is when the cardholder’s card is used without their authorization and consent. 
  • Any problems that occur during the transaction process. Examples of technical problems would include: the customer being charged twice or the card was initially declined but charged anyway by the merchant. 
  • An item that was never received or not described as advertised.
  • If a customer returns an item and they are not credited back their money.


Accepting credit card payments is a recommendation to increase your business. However, chargebacks can cause setbacks if they’re not prevented because it is difficult for merchants to win them. One of the best ways to prevent a chargeback is by providing exceptional communication with your customers. By promptly being available to let a customer know what they are being charged for, you are providing them with exceptional customer service. In the event you are wrong, they may respect you enough to let you fix the error without going through the chargeback process. 


If you begin to notice an increase in chargebacks, then it could mean something is wrong with your product. In a scenario like this, effective communication still goes a long way. After your customers place their orders or purchase items, follow up with them. Leave them with accessible means of communication with you. Surveys, e-mails, phone calls, and polls are all great examples of effective communication methods that allow customers to voice their opinions on your products or let them contact you about problems they would like to address. People in general are cautious about how they spend their money so if they can’t get through to you, they’re going to reach out to their card issuer to resolve the issue. From that point on, you are more than likely faced with a chargeback. 

Topics: Chargebacks