Improving record-keeping is the front line for chargeback prevention
Fighting chargebacks can be time-intensive if you haven’t been preparing for it all along. The process of fighting them requires so much paperwork that businesses often don't have on hand. As a result, they don’t bother to fight chargebacks.
But this is taking money out of your proverbial pocket. In preparation for the holiday season, businesses need to build and maintain up-to-date records of the agreements between yourself and customers.
Merchants must also be prepared and able to present records quickly to banks or other institutions that will be initiating the chargeback process. Having an enforceable record on hand increases your ability to dispute chargeback claims by showing that a purchase was made intentionally.
E-commerce businesses will continue to experience high levels of online purchasing through the holiday season. Many companies that haven’t done so already will need to shift their go-to-market strategy to meet customers’ online buying trends and ensure that their business is protected from excessive chargebacks.
According to a 2020 Shopify study, 52% of buyers have moved online because of the pandemic. More than half have said the pandemic will change the way they shop forever.
What’s more, not only has buying shifted to more digital channels, but according to a study conducted by McKinsey, 15% of B2B buyers have said they plan to spend at least $1 million via digital self-service and online channels.
As online shopping increases, chargebacks (and the toll of their related fees) is also likely to increase. The fees associated with chargebacks can be as high as $100 per item, increasing the overall cost of the transaction for the merchant. Businesses can find themselves out thousands, if not millions, of dollars, from chargeback fees. And this number increases exponentially during the holiday season.
The key to preparing for the holiday season is to lessen the amount of chargebacks and reduce the cycle time to fighting them.
To lessen the amount of chargebacks, e-commerce businesses must disclose as much as possible to the buyer ahead of or at the time of purchase. That means letting them know how much they are being charged, what they are paying for, and how often, if at all, the payment will recur. This information needs to be included clearly and prominently during the checkout process. Alternatively, it can be dynamically rendered in the clickwrap terms of service that buyers must accept at the time of purchase.
Your terms of service are your first line of defense against any chargeback dispute. During the holiday season, it is especially important for your e-commerce business to ensure that the terms of service and other customer-facing agreements are kept up-to-date. Equally important is ensuring consistency across the business and digital selling channels. Should a dispute arise, you can point to your terms as evidence of an agreement between your business and your buyer.