Do you want to know how to prevent Paypal chargebacks that might be affecting your business financially?
Read this article to the very end to know ten ways you can implement to avoid the same.
Why Should We Know How to Avoid Chargebacks on PayPal?
A tiny dispute charged to you can make your company’s financial standing suffer a huge blow. As this happens, it affects the chances of you getting funding negatively. The image of your company that is created in the minds of payment processors will also be negative.
This will also result in a loss of trust between you and your sponsors. It can certainly jeopardize the future growth of the company. The possibility of such a scenario is quite high in the real, day-to-day world.
As you are running a business, predicting and avoiding chargebacks is impossible. However, you can certainly avoid such chargebacks by planning things and systems perfectly. A strategy to reduce the possibility of chargebacks will also be a great move at this point.
Read this article on “How to Avoid Chargebacks on PayPal” to the end. You will be able to keep your business credit score well within the ideal range. You will achieve this by keeping your business’s chargeback ratio lower than 1%.
However, some things need to be addressed before moving on to the main topic.
What is Chargeback? How Does It Work?
The meaning of chargeback is exactly the opposite of charging someone for services. That is, the customer is asking for their money back. This is usually done by approaching their financial institute.
This institute must have issued their credit or debit card with which they paid for the services from your company. The canceled or returned purchase ensures their money is back to them. Hence, it’s called a “Chargeback.”
The concept of the chargeback greatly impacts the financial stability of a company. Despite that, its existence is valued so much. It is because of the protection it provides to any card user.
If a person has been a victim of fraud, then a chargeback presents a chance for that person to get their money back. The companies have ensured that everyone can benefit from this feature.
For this, payment processors make the process of filing a chargeback very easy. This is why it is noticed that customers often request a chargeback without even being a victim of fraud.
The customer may request a chargeback for various reasons. We all have filed a dispute at least once because of these reasons:
- Not satisfied with the product
- Found better deal
- Found misprinted stuff online (Thus bought the product, but now it does not seem of any use)
- Failed to recognize the charge on their credit card statement
There are several such reasons for customers to request a chargeback. As the chargeback is initiated by the customer, the next step that your company has to go through is Appeal.
In this, you will have to gather proof of the authenticity of your business. You will do this by showing that you have provided the customer with proper services or products. This step is the longest one in the whole process.
In the same way, the cost of appealing a chargeback is very high. Sometimes, it surpasses the price of the product or service. Thus your company will suffer a loss. To save your funds, read this article on “How to Avoid Chargebacks on PayPal?” till the end.
Why is Avoiding Cashbacks So Important for a Company?
A company’s loss if its dispute fails is so high. This is the major reason for avoiding chargebacks. This loss does include the price of the product or service that you provided the customer. This is, along with other fees like merchant services and processing fees.
The rate you request with chargebacks also defines your company’s future. It can strongly affect the chances of your future partnerships. Ideally, a minimum percentage of chargebacks is expected from a company. It affects your company’s finance directly by damaging your credit scores. This also puts the reputation of your business at stake.
Besides, if you wonder, “can you get cash back with Apple Pay” this guide will show you everything about Apple Pay and the steps to get it back with it.
How to Prevent PayPal Chargebacks – 10 Ways to Avoid Chargebacks
No matter how chargebacks impact your business, you can certainly avoid them. You just have to follow the tricks given below.
We have mentioned ten ways to avoid chargebacks. They will prevent your business from suffering a loss.
Also, some users wonder how to block someone on PayPal or how to unblock someone on PayPal. If you have one of those questions, here is the right guide.
1. Write a Great and Clear Policy Regarding Returns
Keeping an easy return process could mean that customers can take advantage of it. There are many customers who would return their orders without any solid reasons. You can choose to state the conditions for returns and chargebacks in your return policy.
However, the process may become a bit harder. Their consent to this policy would imply that they have figured out everything necessary.
In this section of “How to Avoid Chargebacks on PayPal”, we have shared some relevant tips. This will help you in improving your Return Policy.
● Return FAQ Page
A list of FAQs will improve the perception of customers about the Return Policy.
● Asking for Feedback
After the purchase is made, you can ask the customers if they liked the product and if they are satisfied with it. This will help in clearing out any unanswered questions or doubts that they have.
● Automated Return Process
An online and automated process for returns ensures more Convenience for customers.
● Alternate Modes of Communication
Along with emails, you can provide customer support. You can also use other mediums such as messages, calls, online Chatbots, websites, etc.
● Return Shipping for Free
Shipping is one of the major expenses in running a company. However, providing free return shipping is recommended.
● Taking Reviews After the Purchase
Customer satisfaction is a priority. To ensure that your customer is satisfied with the purchase they made, you can send a small email. In that, you may ask them about their review of the purchase.
2. Give Your Contact and Email to the Customer
To ensure that your customers come to you before filing a dispute, you can provide your customers with email and phone numbers.
This way, if they have a problem with the product, they can confront you, and you can solve their issue.
3. Product Should Be Explained in Detail
You should explain your product perfectly on your company’s site. This is to ensure that the customer knows everything about the product.
4. Less Keying in Credit Card Numbers
Swiping a physical card or using an EMV chip will complicate the Chargeback process. You can use this to lower the chances of getting requested with chargebacks. Thus, this way, you will be able to maintain your credit score.
5. Making the Customer Signature Compulsory for Card-Present Transactions
The fifth track on “How to Prevent PayPal Chargebacks” is to take the customer’s signature. It will act as proof of purchase.
This will authenticate the whole process of purchase. This may also increase your chances of winning a dispute,
6. AVS and CVV Code Confirmation
The Address Verification Service ensures the Zip code. The CVV ensures the Card number. These two strengthen the safety of the transaction. And by doing so, you can avoid chargebacks,
7. Correct Payment Descriptor on Your Merchant Account
The payment info on your merchant accounts, such as name and number, should be very distinct. This way, customers will know that your business is legit and distinct.
8. Trackable Shipping and Shipping Insurance
If the customer can track their shipment, it will only increase trust. This also benefits you due to being proof of delivery.
9. Trying Your Own Services for Yourself
If you buy from your site for once, you will know what hardships the customers had to face. This way, you can improve the quality of your business by making changes. Make sure your customers can easily contact you.
10. Clear Process of Shipping and Billing
This is the final trick in this article on “How to Avoid Chargebacks on PayPal.” Most of the time, the complicated shipping and billing process is the downhill step for a purchase.
Customers like such processes to be simple and transparent. We have listed a few ways to improve your Shipping and Billing Processes below-
- Q: Can I completely eliminate chargebacks on PayPal?
- A: While it’s challenging to eliminate chargebacks entirely, implementing preventive measures can significantly reduce their occurrence.
- Q: What should I do if I receive a chargeback on PayPal?
- A: When you receive a chargeback, gather all relevant evidence and documentation to support your case. Respond promptly to the chargeback and provide the necessary information to prove the validity of the transaction.
- Q: Can chargebacks be reversed?
- A: Chargebacks can be disputed and potentially reversed if you can provide compelling evidence that the transaction was legitimate.
- Q: Is it important to keep track of customer communication?
- A: Yes, keeping track of customer communication is crucial as it can serve as evidence in case of disputes or chargebacks.
- Q: How often should I review and analyze my transaction data?
- A: It’s recommended to review your transaction data regularly, at least on a monthly basis, to identify any suspicious patterns or signs of fraudulent activity.
In this article on “How to Avoid Chargebacks on PayPal,” we have discussed ten ways to avoid chargebacks. But this extra tip is regarding your Payment Descriptor.
It is recommended that you confront your payment processor about your merchant account. This way, your merchant account can be enhanced according to your needs.
Your business should be compatible with the payment process. To ensure this, you can ask your payment processor for advice. Also, it is their duty to make your payment processes more secure and convenient.
So, if your payment processor refuses to help, you should look for a new payment processor. This will enable more convenience for the future of your business.