How to Prevent Chargebacks

Contributed by Jennifer Pollock of Square. 

Disputes with customers are always a drag. This is especially true when it comes to dealing with chargebacks. Below, we walk you through some of the common causes of chargebacks, as well as what you can do to prevent them.

But first, what is a chargeback?

Chargebacks happen when customers dispute a charge from your business and ask their card issuer to reverse it. Chargebacks are meant to help protect customers from unauthorized transactions. But they can mean big headaches for small businesses. While the chargeback is being looked into, the disputed funds are held from the business until things are resolved. Unfortunately, resolving a chargeback can be time consuming and complicated, with a lot of paperwork and documentation. But if you sell with Square, you can rest a little easier about chargebacks. We cover all eligible chargebacks (chargebacks of $250 or less, up to $250 a month) — free. Learn more about Square Chargeback Protection.

What are some common causes of chargebacks?

1) Fraudulent transactions

If someone gets charged for something from your business but never bought anything from you, something’s amiss. It could mean that there’s fraud at play, which will likely instigate a chargeback. To protect your business from this type of chargeback, you should get a point of sale (POS) that can accept secure payment technologies like EMV chip cards and Apple Pay.

2) Shipping issues

If a customer bought something but never received it in the mail, that could land you a chargeback. To prevent this situation, make sure your shipping system is as streamlined as possible, with tracking numbers always at the ready.

3) Technical issues

If your website isn’t functioning properly, or if customers accidentally clicked something in the checkout process (user error), they may have been charged for something they didn’t intend to buy. Be sure to integrate a reputable e-commerce solution that has an easy-to-navigate, snafu-free checkout process.

4) Credit not processed

The return and crediting process can be fertile ground for chargebacks. This is especially true if customers return something expecting a refund and don’t see that credit in their bank account right away. To avoid this, you need a reliable system for handling returns and credits. And make sure you clearly state your returns and cancellation policy to customers when they buy something — and when they return it.

5) Dissatisfaction

Sometimes customers issue a chargeback if they’re dissatisfied with the product for one reason or another. The solution to this one is simple: Run a great business that prioritizes quality and customer experience above all else.

If you sell with Square and are dealing with a chargeback, we’re here to help. Square Chargeback Protection excuses you from liability for payment disputes, up to a total of $250 a month. All you have to do is provide us with some basic information regarding the payment in question, so we can fight the dispute on your behalf. Which means you’re covered — no matter how it’s resolved.

Photo Credit: Provided by Square with permission to use.