With e-commerce continually increasing in popularity and the digital shopping experience becoming more accessible than ever, it's no wonder the Card Not Present (CNP) market is booming.
CNP transactions are especially convenient for shoppers, who can make payments anywhere with just a few clicks – but this convenience also carries additional risks, including an increase in chargebacks.
For merchants, understanding what chargeback fraud is and implementing strategies to minimize its impact on their business is essential when it comes to keeping their bottom lines healthy. In this blog post, we’ll understand CNP chargeback risks, strategies, and tips for managing them effectively as an online merchant.
Reasons for Card Not Present Chargebacks
Card not present chargebacks occur when a customer disputes a transaction that was conducted remotely, such as online or over the phone. There are several reasons why a card, not present chargeback may occur, including:
1. Unauthorized Transactions
Customers may dispute a charge if they do not recognize the transaction or did not authorize it. This could happen if their card details were stolen or if someone else made a purchase without their consent.
2. Technical Errors
Chargebacks may occur due to technical errors such as double charging or processing errors. Customers may dispute the charge if they were charged twice or if they were charged for an incorrect amount.
3. Fraudulent Activities
Chargebacks may also occur due to fraudulent activities such as phishing, hacking, or identity theft. Fraudulent activities may result in unauthorized transactions, leading customers to dispute the charges.
Strategies to Reduce Card Not Present Chargebacks
When dealing with card not present chargebacks, it's important to make sure you have the proper strategy in place. A few key tactics to maintain a low ratio of chargebacks are improved customer service, stringent security measures, chargeback prevention tools, and a clear refund policy.
Making sure customers feel secure when shopping on your website or app is essential as providing them with friendly and helpful customer services that prioritize their satisfaction is as well.
Assist your customers with completing purchases easily by consistently providing clear instructions. Additionally, implementing secure payment technology and fraud-prevention tools can help to keep unauthorized transactions at bay.
Make sure refunds are handled quickly and securely, so it’s recommended to create a simple but effective refund policy that outlines the process clearly for both customers and staff alike.
Following these strategies can be profitable in reducing Card Not Present Chargebacks and ensuring happy return customers in the future.
Steps to Handle Card Not Prevent Chargebacks Once Occured
Credit card chargebacks can be a frustrating and time-consuming process for merchants. Even with prevention strategies in place, chargebacks can still occur. When a chargeback does happen, it's important to respond quickly and take the necessary steps to handle the situation effectively. Here are some steps you can take to handle chargebacks:
1. Respond Quickly to Chargebacks
When you receive a chargeback notice from your payment processor or bank, don't ignore it. Respond as quickly as possible to avoid missing any deadlines. Delaying your response may lead to losing the chargeback automatically.
2. Provide Relevant Documentation
To fight the chargeback, you will need to provide evidence that the transaction was valid, and that the goods or services were delivered as agreed. Providing documentation such as signed receipts, shipping documents, and order confirmations can help your case. If the chargeback is due to a fraud dispute, provide proof of your anti-fraud measures, like CVV verification, shipping address matching, and more.
3. Communicate with the Card Issuer
The issuer of the card is responsible for investigating the chargeback dispute. You may need to provide additional information or documentation to support your claim. Communicating with the issuer can help you better understand why the chargeback occurred and provide them with any additional information they may need.
4. Dispute Chargebacks when Appropriate
If you believe that the chargeback is invalid or that you have provided sufficient evidence to refute it, you can dispute the chargeback. However, keep in mind that there are strict timelines for disputing chargebacks, and the process can be lengthy.
Final Thoughts on Card Not Present Chargebacks
Card Not Present Chargebacks can have a detrimental impact on the revenues of any business. As a merchant, it is important to stay proactive and take measures to reduce the number of chargeback disputes as much as possible.
Additionally, being aware of proper dispute resolution steps can help merchants quickly act on a chargeback instead of letting them linger unresolved.
Chargeflow autopilot solutions offer merchants an effective method to prevent chargebacks and fight disputes should they occur.
Therefore, merchants should consider investing in such solutions to ensure that their revenues continue to thrive despite increasing cases of Card Not Present Chargebacks.