How a Payment System Helps Reduce Chargebacks
Chargeback is the opportunity for a credit cardholder to reclaim spent funds through payment reversal. Typically, this pertains to unauthorized or fraudulent transactions, but often it’s triggered by a customer’s complaint about poor service delivery. We’ll discuss why chargebacks are relevant to high-risk businesses and how to reduce their occurrence.
The Negative Impact of Chargebacks on High-Risk Business
A high volume of chargebacks has a negative impact on any business, but they are especially concerning for high-risk enterprises. Firstly, customers often attempt to abuse the refund process, seeking a refund even after utilizing the services. Secondly, banks closely monitor each chargeback and may impose fines on high-risk businesses. Thirdly, businesses not only lose money following each successful chargeback but also suffer reputational damage.
Before refunding the funds to the customer, a financial institution (payment system, regulator, service provider’s bank) conducts an investigation. The costs of this investigation often fall on the shoulders of the high-risk enterprise. Even if the chargeback is successfully disputed during the investigation, the business’s reputation may already be compromised. As a result, many companies facing frequent customer refunds become non-competitive.
How to Minimize the Number of Chargebacks
There are several ways to reduce the number of chargebacks. To adequately safeguard your business, it’s recommended to follow at least a few of them:
1. Provide clear and accurate information about the services.
2. Implement a high-quality customer support service for quick problem resolution.
3. Monitor payments and analyze transactions for suspicious activities.
4. Establish simple and transparent refund and exchange policies.
5. Analyze chargeback data, and utilize anti-fraud tools and services to detect and prevent fraud and unauthorized transactions.
6. Use a reliable payment processing system with a high level of transaction security.
A reliable high-risk payment system simplifies the task of reducing the number of chargebacks. For example, Betatransfer’s BT-Wallet service ensures the necessary level of transaction security and provides transparent conditions for refunds when necessary. Moreover, it allows for cryptocurrency payments, which eliminates the risk of chargebacks since blockchain transactions cannot be reversed.