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Chargeback is basically a charge that is relined to a payment card after a customer disputes an item on their account statement. Chargebacks can occur on a debit or credit card and it can be granted to a cardholder for variety of reasons. However, over the years chargebacks have become a major problem for the ecommerce companies. On an average 6 cases of chargebacks occur or every 1000 franchises that is a ratio of 0.6%. there has been a rise of 20% in credit card chargebacks every year. One of the reasons for this increase is that the banks and credit card companies make it easy for their customers to dispute the charges. Thus, chargebacks are starting to become a widespread problem for online shop owners. To avoid the chargebacks, the companies need to know as to how to deal with them and prevent it from happening in future.

Basically, chargebacks are classified in four categories namely fraud, cardholders dispute, authorization issues and processing errors. Most of the chargebacks are on account of fraud related disputes followed by cardholder’s disputes.

There are several precautionary measures that an ecommerce store can adopt to avoid chargeback from customers or at least minimize the number or cases of chargebacks; as mentioned bellow:

  1. Ecommerce companies should not waste time disputing chargebacks, since the banks and credit card companies protect the consumers in case of chargebacks. Only high value transaction maybe looked into specifically.
  2. Ecommerce companies should ensure they ship their order in time a allow their customers to track the orders.
  3. Companies should conduct the address verification in case of large transactions wherein the billing and shipping addresses are different. They should set up a fraud metric system.
  4. They should provide exceptional customer service and high-quality products.
  5. They should post check out notifications and follow up emails to their customers once the goods are transported.
  6. Ecommerce firms should choose a payment processor with good merchant services.

 All the above steps shall ensure that chargebacks disputes are drastically reduced. Lastly the ecommerce companies should not dispute each and every case of chargebacks; which in the interest of their company and deal wisely with the disputed ones.

There are several ways to avoid chargebacks; to start with the ecommerce, store should have an integrated chargeback and extensible fraud prevention and detection framework such as PayAid’s Integrated Chargeback Management System with document management system which shall run the customers information through a database of e-commerce and thereby detect any fraud and help the business avoid getting into such chargeback situations.

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