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What can you do to manage and prevent the occurrence of disputes, charges or paybacks?

Jan 20, 2023

If you run an online-based business and sell something and then you receive the demand notification. The process usually takes weeks, or months following the initial sale. There's now administrative issues to be dealt with and the possibility of losing the profits from the sale and you'll be unable to manage the operation of your company.

While this isn't a common occurrence but if it occurs on a regular basis major suppliers like credit card companies could start charging fines, enforcing stricter regulations or even severing relations with the customer.

The proactive approach to stop the occurrence of conflicts and deal with any that develop will help keep your company free of headaches. Even better news? Everything you require to be aware of about this piece writing.

Table of Contents

What's the definition of an agreement? What are chargebacks?

Payday disputes may arise whenever clients contact the credit card firm they use to dispute a charge on the bill. The company that handles credit cards takes these concerns seriously when they decide that the reason for the issue is legitimate, they'll offer the customer with a pro forma credit on the account belonging to the customer until the issue is settled. It could also be referred to as the charging back.

Why do chargebacks and disputes occur?

There are two main reasons for disputes over payment:

  1. Dissatisfied customers
  2. Fraudulent card activity

We'll explore both some time later.

From the first look, one may believe that you are more at the helm on the first rather over the other. In reality, you control both of them, as you're about to discover.

What can merchants do to respond to disputes

The burden of payday debt cannot be something that you just delay and then hope that they will go away. It's not going to happen. In the absence of them, you'll create issues which could impact the long-term viability of your store.

The credit card companies monitor your dispute rate (the number of transactions that can be substantiated as disputed) and can charge you higher costs or set penalties if your rate of dispute isn't in the right direction.

What should you do if you receive a chargeback

Here's what you need to do if you receive an email from a company with a dispute-related notification:

Get involved immediately

If the company that issued your credit card starts to make inquiries, it is important to respond as soon as you can. If you're using Payments and an active member in the Payments network and you're a member of the Payments network, you'll be advised about any disputes by emails and an email notification on the account dashboard.

If you fail to respond in a short period of time, it could lead the company to believe that you are not planning on filing a dispute with the company. Each credit card is issued with its own timeframe that specifies how long an enquiry to settle a dispute remains in progress. But, it is important not to be rash when gathering the evidence before providing all evidence needed before the time limit expires.

If you're using PayPal as a payment method it is possible to login to on the website's dashboard to address the issue.

dispute response in Payments

Provide documentation

Then, you must provide solid and convincing documentation of the transaction. The evidence should include the number of your credit card (or it's a reduced version) along with the date, amount and date of the transaction. Also, you should provide details of the order or proof of delivery, which you store in your file.

This aids them in determining the likelihood of fraud and makes sure that everyone is in an understanding of the conditions.

Submit requested evidence

Other than the usual documents, the network may request additional information about the transaction. If they don't require it, then send your documentation regardless. It's time-consuming to gather all required documents is well worth the effort, however make sure you've submitted the necessary details before the deadline for your submission.

The kind of document you submit will vary according to the type of dispute that you're having with a payment. There are at minimum seven different kinds of disputes related to payment:

  1. The food was not taken care of.
  2. Multiple charges
  3. Fraudulent charges
  4. Inaccurate charges
  5. Product not received
  6. Product unacceptable
  7. Subscription canceled

What happens when you fail to respond to chargebacks?

The idea of chargebacks could seem daunting and difficult to manage. Yet, they are an essential aspect of managing businesses and following basic steps will save you from a lot of anxiety. Credit card companies want that you succeed by protecting their customers, therefore it's essential that you follow their instructions to maintain a positive reputation.

If you opt to completely ignore chargebacks, the process could become complex. It is the process of chargedbacks that are not examined, or not been checked.

First, you lose the profits and revenue generated by the sale. You are added a charge in addition to the loss.

If the issues begin to accumulate and you aren't competent to solve them, the credit card company may issue more fines and charges until you're able bring the chargeback percentage down. If the issue persists and you are unable to resolve it, then you could be limited by the ability to use a part of your revenue from sales. At the end of the day, they may end payments and declare your account high risk.

This could prevent other card networks from wanting to work with you. If you aren't able to accept transactions online and you're not able to effectively manage your company.

It is, however, is an extremely rare occurrence. You can completely avoid it through the right steps.

What is the minimum threshold in a the resolution of a dispute?

The threshold for disputes, sometimes referred to as the chargeback threshold is the amount used by credit card companies to determine when is the most appropriate time to increase monitor levels and sanctions for merchants and businesses so as to decrease the volume of disputes.

What's a dispute rate?

The "dispute rate" is the amount of disputes that can be argued for all transactions executed within the allotted amount of time like, say one week. For instance, if there were 500 payments made in a single week and there were five complaints filed that would give you an average of one percent dispute rate during that particular week.

It is different from "dispute activity' which refers to the number of disputes which occur within a certain period of time, regardless of the deadline that they are handled.

There is a difference in that disputes do not occur within the first few months following purchase. This is what dispute encompasses. It is possible to have five disputes in a single week. Three of them pertain to transactions that were completed prior to the week in question So, your dispute ratio would include the two from this week. But your actions in dispute would be included in each one of the five. Here is more about the process of Stripe when calculating the number that disputes are.

chart of dispute activity

Credit card providers typically count the number of disputes to establish their thresholds for disputes. Every network of cards is guided by their own established thresholds. The criteria is derived from the activity of disputing as well as the volume of disputes. It is more often, both.

For instance, Visa will increase their penalty against businesses that have more than 100 chargebacks per month, and 0.9 percentage of disputes. But, the threshold Mastercard uses to resolve disputes starts with 1.5 1.5 percentage.

The quantity of payments can be advantageous for small businesses as even if there are just fifty or less payments the month, just one gets denied which means you're stuck with two percent. The threshold for volume helps protect small companies away from paying the larger penalty.

When you're making use of Pays and have concerns about how to best resolve disputes, don't hesitate to get in touch with the Support team to get help.

How can I lower my store's rate of dispute?

If you're aware of the way disputes are made Here are some suggestions to reduce the amount of disputes that you will need to resolve.

1. Use a clear bank statement descriptor

An exact description of the document informs clients of where they purchased an item. It will reduce the risk of conflicts that are caused by unidentified charges. Your data will be accessible to the company and they'll be able to tell that this is an authentic purchase. They'll know that it was a genuine purchase.

descriptor statement examples

If a customer notices an credit card balance and is unclear about the amount, they can call us to discuss the problem instead of filing a dispute to the credit card company or seeking resolution through your credit provider of the credit card.

2. Incorporate company details on invoices for transactions

The same way banks utilize the term "descriptor" giving customers clear and exact information on the business they're using in their receipts will increase the likelihood that they'll reach you when they have a concern rather than the credit card business.

In the note, include the name of your business along with your location and phone number. Include your URL and logo and message to the customer service. Be sure to not affect the information regarding your purchase on the receipt.

3. Find an immediate resolution to complaints from customers and look for solutions

Be aware that there are at least seven possible causes for chargebacks. Most of these issues are easily resolved prior to the issue with a great support to the customers.

If a consumer complains about the quality of the item or the condition of it the product, damage or defect which occurred in the course of delivery, or any other concerns, it is important to take note of them and come to a resolution any issues to avoid the possibility of being charged back.

4. Make contact prior to fulfilling any order you believe to be suspect.

It's among the most effective tools for stopping fraud. Being a knowledgeable business owner it is essential to examine the order to see if there are any indications of fraud or risk.

If you don't receive any response, particularly when you've made repeatedly calling, or the number you are calling appears to be wrong, you might consider requesting a refund of your purchase, however without the shipping cost.

Other processors offer the option of using the option of a fraud detection measure, but they're not always as easy to use. With Payments, this feature can be found right next to each transaction. It's not necessary to sit in a queue at the credit card processor throughout the day.

5. Be sure to have proof of the delivery

If possible, this may be a solid proof you can use when a buyer states the purchase did not arrive. It could be, for instance, tracking shipment specifics, the requirement that the courier verify the delivery or snap a photograph of the merchandise that was sent, and many others...

6. Clearly state policies

The policy you have for returns, refunds and cancellations are crucial to your clients. Include them on your receipts and invoices. Include them on the most important pages on your website like your checkout pages. Display them in store display. Then, you can ask the buyer to confirm that they have accepted the conditions of your offer.

7. Use accurate product descriptions

The product's description have to be in line with the item. If the customer receives something different from what they expecting, they may challenge the value since they'll believe that you gave them a wrong item.

The details matter. Don't skimp.

8. Remove items that are discontinued or have been discontinued.

Eliminate items from your online store that cannot be accessed so that consumers aren't compelled to buy something they'll never purchase. Consider doing exactly the same for items which aren't available, so long as you are able to easily and efficiently add an "out out of stock" image on the page of your item and change it when the situation shifts.

out of stock settings in

9. Be cautious about international purchases

Certain kinds of fraud could occur in this day and age. Customers from specific regions may be at a higher risk of becoming the victim. The best option is to pick the payment method that incorporates fraud detection to help mitigate the risk of it occurring, for instance, Payments.

10. Get as much detail from your clients as you can

A lot of businesses do not have to collect information about their delivery, however it is a good idea to gather this information. It can help confirm that the person that you identify as the actual cardholder is whom they claim to be.

Every transaction you make it must be accompanied by the following information:

  • Name of the customer
  • Customer email
  • CVC number that appears on the card.
  • The billing address and postal code are complete details.
  • If the shipping address is different than the billing address, the shipping address must be different from the billing

11. Send tracking numbers to the courier

It's important to be on time whenever you make the decision to do this. When a client orders the item, they'll be sent an email with details about tracking when it's feasible. After that, they'll receive periodic updates. It is an excellent method to prove that they didn't receive the product.

Strengthen your defenses against fraudulent charges

Are you interested in increasing the detection of fraudulent transactions? This is only one benefit from using Payments. It helps online companies accept payment and safeguard their image and improve their profitability.

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