Chargebacks are undeniably one of the most frustrating parts of any online business. In fact, chargebacks are designed to ensure consumer protection from fraud, unfairly provided services or low-quality goods. However, as it sometimes happens, chargebacks could be used to pressure business. That’s why companies should comprehend how this mechanism works, why this occurs, and how to avoid unnecessary financial problems.

Reasons why chargebacks happen

It seems logical to first understand the reasons for the chargeback emergence to better deal with them. So the reasons are the following:

• Fraudulent operations. It’s the main reason why chargebacks were invented. Every cardholder who has been scammed online uses this function to return funds.
• Authorisation errors. Similarly to the previous reason, chargeback happens when someone uses a credit or debit card unbeknownst to its owner.
• Processing mistakes. For instance, the double write-off of funds for one product.
• Consumer disputes. 20% of chargebacks happen because of consumer dissatisfaction with services rendered or product quality.

Now, let’s go from understanding the reasons to solving problems.

How to avoid issues with chargebacks

Undoubtedly, every situation requires its unique approach. However, there are some of the most common causes of chargebacks, which can be worked out to reduce losses.

• Dispute reason codes. Chargebacks have their categories, and each of them has its evidence base. Comprehension of these codes and knowing which one is actual in each case help businesses build a correct defence strategy.
• Thorough preparation for every dispute. It’s not about reason codes only but collecting data about clients and your actions, the proper documentation, and everything that can serve as evidence.
• Choose your fights. To battle for every chargeback is not a thoughtful decision and may bear reputation costs. But avoiding disputes whatsoever brings nothing but money losses. So, decide which chargebacks are worth disputing.
• Keep communicating with your clients. Clear and transparent interaction with your customers helps you prevent many chargebacks. Detailed transaction progress reporting will remove some of the client’s questions.

For sure, chargebacks are unpleasant things to deal with. However, courage and knowing how to face them help businesses significantly decrease financial losses. Elaborate policy about dispute fights for chargebacks also may boost a company’s reputation and enhance its trustworthiness.