A chargeback is a full or partial reversal of a payment made with a credit card. Credit card companies use the chargeback mechanism to correct mistakes, and these types of transactions shouldn’t worry you.
However, a chargeback is a headache and if your business incurs a significant number of chargebacks, the growth of your company will suffer.
When you incur a credit card chargeback, analyze the order related to the chargeback. Examine what exactly happened with that order in each department of your company including order taking, fulfillment and customer service departments.
You could also create a numbering system. For instance, assign points for each infraction committed by a department. When an order is received by the order taking department, then fulfillment, then customer service, set up a points system and monitor how many points each department would gain when the company incurs chargebacks.
Provide feedback and steps to improve the performance of each department to reduce chargebacks. After tracking the history of the order, create policies for each department to improve its performance and implement those changes by hiring new personnel or re-training your employees.
Track the order related to the chargeback and analyze the history of the customer's interaction with your company. Check for any fraud alerts generated by that customer. Verify the number of instances when the customer used a particular credit card number to purchase your product or service.
Also, verify the geographical location and IP address of that customer. The software related to your chargeback management solution would provide you with an alert with a numerical value (for example, 70% probability for a fraudulent transaction based on various factors detailed above). Conduct a manual review for such orders with red flags associated with them.
For products or services with considerable price (say, $500 and above), you could request your customers to send you a photocopy of the front and back of their credit card in order to reduce chargebacks.
For high-priced items, call your customers and verify that the shipping address indicated in the order is the intended one in case the billing and shipping addresses do not match. Also, request signature confirmation upon delivery of goods.
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