Chargeback Prevention

Chatbots Can Help Automate Chargeback Prevention

Customer talking to chatbot

The sun never sets on ecommerce, and you never know when a customer is going to have an urgent question for you. Even merchants who can afford 24/7 customer service coverage may struggle with long wait times and impatient customers, which is why chatbots have started becoming so common.

When used effectively, chatbots can handily field your most frequently-asked questions and route more challenging problems to live customer service representatives. Many merchants have found out the hard way that inadequate or unresponsive customer service can lead to transaction disputes. Can chatbots help merchants avoid chargebacks?

New call-to-actionPeople may often say that they prefer a real human interaction over talking to a bot, but the age of the chatbot is here and most people are just fine with it in the right context. Two-thirds of all consumers have some experience getting customer service from a chatbot, and more than half would use a chatbot over a human customer service agent if it would save them time.

Every merchant has a number of questions and inquiries that come up especially frequently. When you can train chatbots to provide these customers with the answers and information they’re looking for, you can free up time for your human customer service staff to deal with the problems that don’t have easy answers or automated solutions.

Even the simplest question can lead to a chargeback if the merchant doesn’t address the customer’s concerns in a timely fashion. You might not be able to count on a chatbot to smooth over a lengthy and complicated customer dispute, but they can play an important role in your overall chargeback defense plans.

How Do Chatbots Work?

The earliest chatbots were simple, script-based programs that could provide a set response to a specific query. They had their uses, but you had to know how to talk to them. If you provided input that the chatbot didn’t understand, it wouldn’t know how to respond.

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyToday, chatbots are much more sophisticated. They use artificial intelligence and machine learning technologies that allow them to interpret a vast range of potential inputs, allowing users to chat with them in an informal, conversational manner, but still be understood. Customers can communicate with the chatbot just like they would if a human customer service agent was chatting with them, and the chatbot can reply in the same relatable tone—whole retrieving requested information from internal databases, or even the world wide web, at lightning speed.

Many merchants deploy chatbots as interactive features on their website, such as a dialogue bubble that pops up and invites the customer to type in any questions they might have. Once the customer does so, the chatbot app launches, and it engages the customer in conversation.

How Should Merchant Use Chatbots?

Chatbots serve well as an initial point of contact for customer service inquiries. By prompting the customer to say what they need help with, the chatbot can guide them to the quickest possible resolution. For example, if the customer types in “delivery,” the chatbot can help them look up their recent order and provide delivery status updates. On the other hand, if the customer asks a long multi-part question that can’t be answered with a database inquiry, the chatbot can connect them to the next available human customer service representative.

Many customers contact the merchant when they need help setting up or using a product they’ve purchased. Chatbots can help answer these questions and serve up tutorials, instructional videos, documentation, and other resources.

Chatbots can provide a lot of other useful functions for merchants, like capturing contact information for your sales team.

However, there are risks to relying too heavily on chatbots to interact with your customers.

What are the Potential Downsides of Chatbots?

If customers feel like you’re using chatbots to avoid having to deal with them in person, they can end up doing more harm than good. Customers shouldn’t feel like they have to jump through hoops to get a live person to talk to them—chatbots shouldn’t keep them talking in circles for long, and should always provide a link that takes them to a live support channel.

Listen to customer feedback about your chatbots to make sure that they aren’t adding friction and frustration to the customer service experience.

How Can Chatbots Reduce Chargebacks?

There are two ways in which chatbots can play a direct role in reducing chargebacks. Any time a customer approaches you with an issue they’re having, that represents your best possible opportunity to avoid a chargeback from that customer. Even if all you can do for them is refund their money, that’s a far better outcome than going through the dispute process.

The worst case scenario is when a customer tries to resolve their issue directly with the merchant, but they can’t get ahold of customer service—the phone rings and rings, their email goes unanswered—and they go to their bank for assistance instead. By the time the merchant gets around to responding, the chargeback has already been filed.

Delivery and product information alone can eliminate some chargebacks, and these are easy answers for chatbots to provide.

A customer who thinks their order was never delivered can talk to the chatbot to find out about a shipping delay, and a customer who thinks their product is defective can consult with the chatbot and learn that they overlooked a key step in the instructions. Problem solved, chargeback avoided, and the chatbot handles it all.

Even when customer issues are more complicated, chatbots can help by reducing the workload for your human representatives, giving them more time and availability to focus on difficult problems. Chatbots can even learn what types of inquiries are more likely to lead to chargebacks and flag them for priority resolution.


It may be some time yet before chatbots are ready to completely take over your customer service department, but in the meantime they can serve as valuable virtual support staff that fields the easy questions while your actual employees focus on the challenges that only human intelligence can solve.

An efficient and responsive customer service team creates happy, loyal customers who are far less likely to file disputes, and chatbots can be an affordable way to provide speedy and accurate information.

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