The digital marketplace offers incredible opportunities for entrepreneurs to showcase their talent. For this reason, it is growing more and more, as a result of technological expansion and changing consumer habits.
Despite all the differences between the traditional market and the digital market, there is something that is very similar: customers are not always satisfied.
For this reason, many times the customer opposes a purchase or requests a refund, which may be for various reasons, such as a defect in the product, dissatisfaction with the merchandise received or simply the withdrawal of the purchase for personal reasons.
However, these practices, quite common in the digital market, can be avoided by entrepreneurs with a few tips.
Discover in this post what chargeback and reimbursement are, what are the differences between them, who can request each one and how to avoid them.
What is chargeback?
Chargeback is the cancellation of purchases made in the online environment with a credit or debit card, together with the card operator, made by customers. This is a widely used term in the digital market, mainly to refer to .
There are several reasons that can lead the customer to request the cancellation of the purchase. However, the most frequent reason that leads to the chargeback is the non-acknowledgment of the purchase by the customer, holder of the credit or debit card indicated in the payment method.
Many times, the data is fraudulent and the purchases are made by third parties, which gives rise to the right to cancel the purchase and receive the amounts paid, which are canceled by the operator of the card used.
There is also the possibility of chargeback as a result of non-compliance with the terms and regulations established by the credit card management company.
If there is a delay in the delivery of the product, products delivered with defects and other situations can also be reasons for chargeback.
But as negative as this may seem, the chargeback has an important function: to guarantee safer financial transactions.
Without this control, it would be very easy to commit fraud in the digital market, and customers would have to constantly bear the damage, in addition to reducing the desire to buy online.
But, at the same time that it represents security for the client, this practice can hinder the entrepreneur’s billing.
Therefore, it is important to avoid chargeback, to maintain the balance and security of business relationships in the digital market.
Who can request chargeback?
The chargeback request is made by the holder of the credit or debit card used in the purchase. By not recognizing a certain transaction on his bill, the customer contacts the card operator and requests cancellation of the value.
It is a right provided for in the legislation of many countries, in defense of the interests of the consumer, an insufficient party in consumer relations.
Some banks even allow this request to be made directly by mobile, in the account application. However, many customers do not know what a chargeback is when they are applying.
Therefore, it is up to the card operator to analyze the information and proceed with the cancellation of the value unduly charged. That is, it is necessary that there is an abnormal situation for the cancellation to be possible.
Note that for the chargeback to occur, the customer must show legitimate cause. This happens because it is much more related to fraud.
The simple repentance, for personal reasons, does not imply the obligation of annulment. In that case, we would be facing not the chargeback, but the right of repentance, possible in many countries for purchases made by telephone or Internet, within seven days after receipt of the product.
But, after all, when can the chargeback be requested?
There are four basic situations that authorize the chargeback.
- The first of them, less frequent, is the processing error in the transaction, caused by a mistake by the financial institution.
- The second case implies an error in the amount charged to the customer for the purchase. In case of discrepancy between the value reported and the value charged, the customer can request a chargeback. This hypothesis is very common when it comes to misleading advertising or when the client is scammed.
- The third hypothesis of chargeback is very common in purchases made in . It is about the reception of the merchandise in disagreement with what is announced on the seller’s site. Defective merchandise, in less quantity or with different specifications generate the right to chargeback. The customer can, in this case, request the cancellation of the purchase.
- Lastly, the chargeback can be requested by the client when verifying the existence of fraud. The card may have been stolen, cloned, or even misused by friends and family.
What is the refund?
The refund, unlike the chargeback, is not a purchase cancellation made by the card operator, but a refund of the money spent by the customer, made by the company that made the sale.
Laws in many countries require startups to have a clear refund policy. In addition, this practice is quite advantageous for stores, as it conveys trust, attracts new customers and works as an excellent marketing strategy.
You have probably already heard a sales pitch with the following phrase: “satisfaction guaranteed, or your money back!”. It is not like this?
This type of offer gives greater security to the potential consumer so that they make the purchase, since they know that, if their expectations are not met, it is possible to request a refund.
Also, when a customer is dissatisfied with a product and can’t do anything about it, they probably get a bad impression of that company, right?
However, if you are dissatisfied and receive a prompt and efficient refund, there is a good chance that you will purchase again in the future.
Who can request the refund?
Although they vary from country to country, most Consumer Protection Codes establish 3 mandatory situations in which the buyer can request a refund:
- When you regret the purchase, as long as it is up to 7 days after receipt of the product or the contracted service;
- When the received product has a defect;
- When the product is inappropriate for consumption.
In addition to these mandatory situations, you can also offer other possibilities, such as a longer term for repayment.
For example, if you sell an online weight loss course that promises weight loss in a month, you can allow a refund within this period if the product does not work.
In short, be sure to check the terms of the consumer protection code of your country and consider the people who fit into the 3 items listed above and in the clauses of its Refund Policy, because they can request a refund of the money paid. in the purchase.
How to avoid chargeback and refund?
Despite being two different practices, both the chargeback and the reimbursement can harm the financial performance of the .
In the digital market, maintaining a good relationship with customers is essential to avoid requests of this type. The more transparent the relationship and the transactions, the lower the probability of dissatisfaction.
There are some simple and efficient steps that can be taken into account by the entrepreneur to avoid chargeback and reimbursement.
Here are some:
1. Don’t do misleading advertising
One of the most efficient ways to prevent the customer from abandoning the purchase is to never make false or confusing advertisements.
It offers real products that correspond to the material that will be effectively delivered to the customer after the purchase.
In the case of e-commerce, keep images that clearly show the reality of the product.
In the case of digital products, make it clear that the person will receive the file in their email, for example, and not a physical copy of the book at home.
Build faithful and clear descriptions of your products. All so that the customer knows exactly what he is buying and is not surprised when he receives what he bought.
The more transparency applied to digital business, the lower the probability of questioning by the client.
2. Notify the client before processing the request
Not leaving the customer unattended during the purchase process is a great strategy to avoid chargeback and refund.
Notifications help reinforce to the customer that they are making a decision. They can be present throughout the journey within the site and even in the delivery phase.
In this way, at the end of the procedure, the client has made a much more conscious decision.
Just as important as making a sale is making sure the transaction has been done conscientiously.
The possibility that the purchase will be canceled later is much lower when the client is accompanied in the process of acquiring the product.
3. Authenticate card details
Fraud in online transactions is one of the main reasons that lead to chargeback.
There are some complex procedures to make life difficult for ill-intentioned people.
Authentication of credit card data can be done through the request of additional data, such as IP location, name and email, for example.
These complementary data help connect the person who is making the purchase to the owner of the card indicated as a form of payment.
If the person who is making the purchase does not have all this information, the sale will probably not be made. This is advantageous for the merchant, who will not have to deal with the chargeback when the real owner becomes aware of the fraud.
Digital producers using the platform do not have to worry about these types of problems.
Our payment system is prepared to minimize fraud in your products.
We do shopper behavior analytics like purchase history and same card usage, so we’re more likely to know if you’re a potential customer or a scammer.
(To learn more about our payment system, ).
4. Invest in the security of your site
Whoever acts in the digital market, offering products to customers, needs to take care of the security of the site. There are many criminals who take advantage of page security flaws to carry out fraud.
The more trustworthy the site, the less likely it is to be misused by third parties.
But how to do it?
The best way is to implement the SSL certificate, an international technology standard. The certificate…
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