What is Chargeback and How to Avoid It?

mar anto on Sep 17, 2021 in Information

When one use a credit card as a payment method, there are sometimes problems during the payment process. One of the problems that usually occurs is chargeback. What is chargeback? The term chargeback means that there are amount of money that are being hold by a bank due to a dispute during transaction using a card. For online sellers, this condition definitely can hinder the payment process.

Get a Better Understanding about Chargeback

When shopping online, buyers usually make transactions using a payment system via a bank, either by direct debit or a credit card. However, payment methods made via banks or by transfer systems sometimes have a problem, like chargeback, that are detrimental to business owners or sellers. This condition of chargeback can occur accidentally during the transfer process.

There are several things that cause a chargeback, such as transaction errors and when there is a difference between the signature on the receipt and the signature on the credit card.

The bank will stop the transaction process if there is a difference in signatures to prevent transactions carried out not by the real credit card holder. The occurrence of a chargeback can also due to an error in the date or nominal, or repeated transactions (double transactions). In addition, chargeback can also occur when credit card holders feel dissatisfied with the quality of the goods they bought so they issue a complaint to the bank.

This condition can be solved by submitting a report to the bank, so that the money is no longer held by the bank, though sometimes this reporting process takes time so buyers and sellers can sometimes experience some losses before their money back.

Disadvantages from a Chargeback

This condition where some amount of money are being hold by a bank causes the payment that should have received into your bank account eventually canceled due to a chargeback. As a result, your financial records could become rather messy, because the money is stuck and even worse, it could stagnate your business. This, of course, does not only reduce your profits, but also your income. Therefore, it is very important to avoid chargeback risk reported by the buyer that can disrupt your business from running smoothly.

How to Avoid Chargeback

There are several things you can do to avoid a chargeback that can cause you a loss as a seller or a business owners:

  1. To minimize complaints from buyers, they must pay attention to all the information that appears in their invoices. Such as the nominal, the source of the withdrawal of the money, and the date of the transaction being made before they continue the payment process. Buyers have to ensure that the information displayed at checkout is transparent and clear.
  2. Make sure the seller provides detailed information regarding the product being sold. The product descriptions, images and features must be in accordance with the real condition of the products. Sellers must also response to product information questions by the buyer.
  3. Explain what terms and conditions apply on your invoice and website in case you have to refund or when buyers want to return the products.
  4. Recognize and be aware of signs of credit card fraud by checking the original address of the card registered by the buyer, especially if they make a large order. It is recommended to send an email to confirm the status of the order.
    Keep all transaction history and communications with buyers, so when you file a report, you have a solid evidence to protect you against credit card chargebacks.
  5. It is recommended to provide a safe and realistic estimated delivery time. Use a trusted expedition service that has an online tracking service. Add insurance service if you want to extra security system, so that buyers will feel more secure about their purchases.
  6. If the dispute is caused by the buyer’s misunderstanding, make sure you, as a seller, understands the problem. You must also offer a solution that is acceptable to both parties to avoid a credit card chargeback report.
  7. Using a fraud detection system. You can ensure that the credit card received has used a 3D secure authentication code to ensure that the card user matches the registered card owner. Banks use this security system as a proof of chargeback protection for credit cards.

To receive payments from credit card safely and directly on your website or online app, you can use a payment gateway service. But make sure the payment gateway you are using has a PCI-DSS certificate (international security standard for managing credit card transactions), and is equipped with a fraud detection system (FDS). By using a payment gateway with a good FDS, you can protect your online business from theft or fraud by setting the nominal transaction limit, selecting the allowed transaction region and block suspicious card numbers.

One of the best payment gateway services that has a license from Bank Indonesia and has a PCI-DSS certificate is Duitku. Besides accepting payment systems using credit cards, Duitku also facilitates customers to pay using various other methods such as e-wallet, bank transfer, retail outlets (Indomaret, Pos Indonesia, Pegadaian, Alfamart), installments without card, or other payment methods. You can choose the payment method you want to provide for your customers on the Duitku dashboard.

By integrating a payment gateway service to your website, you can process payments in real time automatically. The secure, fast and easy transaction payment process provides a pleasant online shopping experience for customers, and therefore can encourage customers to make product purchases.

Start accepting payments via credit card using Duitku payment gateway now and let us take care of your transaction!

Ready for your transaction?
Contact our customer service available 24/7 or register to start using Duitku right now.