How to Prevent Chargebacks at Your Online StoreBy Lisset May Cervantes | Fri, 05/14/2021 - 13:01
Payment alternatives in e-commerce are a priority in order to offer our clients a variety of options when they make their purchase.
Although the main options are still card payments, both debit and credit, in recent years, payment upon delivery, payments made at convenience stores and the “buy now, pay later” method have become popular.
Delivering sales through card payments within e-commerce is a necessity but it also implies certain risks. Let’s look at what these are in detail and what we can do about these setbacks that arise from online card payments when buying and selling.
What Is a Chargeback?
A chargeback is defined as a request for the store where a purchase was made to return a charge to the cardholder after the client refutes the charge. The client is requesting a refund of the transaction.
A chargeback is generated when cardholders communicate to their bank that they do not recognize the charge made to their card by your online store.
In Mexico, more than 99 percent of clarification requests are attributed to fraud — that the card information was compromised by someone committing fraud. In the third quarter of 2020 alone, chargebacks represented a total of 319,818,390 debit card payments, according to CONDUSEF, which online businesses have had to absorb.
This is where “buy now, pay later” options like Kueski Pay become particularly important, since the way they operate guarantees that e-commerce businesses will avoid these charges. At the same time, they make it possible for people without a card to buy online and start generating a credit history.
Types of Chargebacks
Now that we have determined what a chargeback is, we can define the reasons why they occur. Here are some of them:
- When the client does not recognize the charge on his/her account statement.
- When the transaction is duplicated in the client’s account.
- When the person states that he/she has not received the product or service.
- When the client did not authorize the transaction.
- When the client states that the goods or services do not match what was offered.
- When multiple charges were made for the same purchase.
- When the card was stolen and an unauthorized person made the purchase.
We can divide chargebacks into three types. Although there are different reasons why they can occur and that lead to a complaint, the main ones are identified as follows:
- Due to fraud.
- Due to dissatisfaction with the product.
- Due to issues with shipping or delivery.
Mexico is ranked eighth globally for identity theft and at least 400,000 people are victims of identity theft annually, according to CONDUSEF.
In 2020, internet fraud cases increased by 1 percent compared to 2019 and they are representing a larger proportion over time; in 2016, they represented 32 percent and in 2020, they reached 69 percent. This year, 85 of every 100 internet fraud cases were resolved in favor of the user.
Depending on the platform or services an online store uses, the chargebacks typically take a commission, and therefore, the whole transaction amount is not necessarily returned, since there is a penalization.
All payment platforms have their own policies for these types of situations in e-commerce.
One example is Shopify, which has established its policies around chargebacks and its recommendations regarding them.
In the same way, PayPal has policies about disputes or chargebacks.
Conekta also offers a series of recommendations to prevent these types of chargebacks or measures to follow if you have a chargeback.
A very simple way to avoid chargebacks and make sure that purchases are made in your e-commerce business is a solution like Kueski Pay. This payment method is responsible for validating the buyer, as well as their details, ensuring payments are secure so that businesses can forget about this part of the process.
Implement a Virtual Payment Gateway
Payment gateway services, as well as providing clients with more ways to pay, can reduce the risk of stolen cards being used because they offer authentication services, which verify the buyer’s data and avoid a bad experience.
Online business adoption is growing constantly, which is why there are currently different entities working on a range of security mechanisms supported by technology to support e-commerce. The goal is to reduce these situations that affect both the buyer and the seller.