Tips to Lower Chargeback Rates

Lower Chargeback Rates:In every business, chargeback remains a topic of concern for the merchant. No matter what you do and how you conduct your business, you will definitely get some chargeback every now and then. However, you can possibly try some methods to lower chargeback rates.

Before we go deep into the topic and discuss how to lower chargeback rates, you should know about the chargeback rates first.

What Are Chargeback Rates?

Every credit card network has their set of rules for merchants. According to one of those rules, a merchant is allowed only a fixed percentage of chargeback each month. This fixed percentage is called chargeback rates.

Generally, the credit card companies offer 1% criteria. This means a merchant can have 1% of their transactions as chargebacks. Otherwise, the merchant has to pay some strict fine or worse.

The chargeback rates are calculated differently for different card networks. Here are some card networks and their methods to calculate chargeback rates:

VISA’s Method To Calculate Chargeback Rate

VISA has a very simple method where they take a number of chargebacks of a month and divide it with the number of transactions of that month to get the chargeback ratio.

This chargeback ratio is multiplied by 100 to get the chargeback rate.

Chargeback Rate = (Number of Chargebacks ofa Month/Number of Transactions of Same Month) *100

MasterCard’s Method To Calculate Chargeback Rate

On the other hand, the MasterCard take the number of chargebacks of a month and divide it with the number of transactions of last month to get chargeback ratio. To get chargeback rate, the chargeback ratio is multiplied with 100.

Chargeback Rate = (Number of Chargeback ofa Month/Number of Transaction of Previous Month) *100

Similarly, other card networks have their method to calculate the chargeback rates. However, the 1% criteria remain the same unless there are some special conditions like in the case of high-risk business.

Tips To Lower Chargeback Rates

An excessive number of chargebacks affects business and profitability. This is why you need to keep chargeback numbers under the limit.

• Communicate Clearly – This is the first tip to avoid disputes in your business. If you and your customers can communicate then most of the disputes will be handled without having to file chargebacks.
• Explain Terms & Conditions – The terms and conditions of your business should be clear to the customer before the payment is made. This is the responsibility of the merchant to make sure that customers know the product or services they are purchasing.
• Keep A Keen Eye On Delivery Services – If your business involves delivery of goods then you need to make sure the customer gets the item on time and without any defect. Ideally, you can offer live tracking services and customer support services.
• Hire Trained Staff – A well-trained staff is important when managing the business. Trained personnel can ease the customer by providing all the required information regarding the product and make a good sale.
• Monitor Disputes – Finally, you need to keep the record of all the disputes occurring in the business. By using this data and analyzing them you can pinpoint the cause of chargebacks and Lower Chargeback Rates, if possible.

You can simply hire a chargeback management company, who will manage chargeback, file Representment, and keep disputes under control. A chargeback management team will use tools to predict chargeback of next month so that it won’t hurt the overall revenue of the business. Chargeback Expertz offers such services, you can contact us for more information.

Where Are You Getting Chargebacks From?

It is important for the merchant to know about where the chargebacks are generating from and then work to Lower Chargeback Rates. Here is some common cause of chargeback that a merchant can face:

• If the merchant completes the transaction without proper authorization from the customer and bank, this situation will result in a chargeback.
• The transaction involved an expired credit card of the customer.
• After purchasing the product, the customer gets the “buyer’s remorse” and do not want to keep the product. To get the money back, customer files the chargeback.
• The merchant is involved in some kind of fraud and if the bank suspects that, the merchant can face some strict consequence.
• In the case of friendly fraud when the customer gets some issue with the product, instead of asking the merchant for replacement and refund, the customer files the chargeback.

All these situations and more can cause a lot of issues for the merchant. And when it comes to Lower Chargeback Rates, a merchant faces a lot of troubles. However, all these troubles can easily be avoided by hiring a chargeback management company.

Chargeback Expertz can help you with the excessive disputes and help a merchant manage them. Such services are provided by Chargeback Expertz. You can simply contact at the toll-free number i.e.+1 (888) 901-8653 and talk to an expert for more information.