Disputes with customers can be frustrating for any business owner, especially when it comes to card payment disputes that result in chargebacks.

Transaction disputes can have many different causes, such as:

• a customer not recognising a transaction on their card statement
• a customer not receiving a product or service
• duplicate billing
• recurring billing that wasn’t cancelled as requested

But no matter the scenario, there are steps you can take that can help you prevent chargebacks.

1. Invest in security for online and in-person payments

One of the common reasons behind card payment disputes is fraud. So having efficient security systems in place can minimise the volume of chargebacks. Some measures you can implement to increase transaction security are:

• Keep your point of sale (POS) software up to date. Software updates usually address new security threats and vulnerabilities.
• Never enter a customer’s card number into the EFTPOS terminal if the card cannot be tapped, inserted or swiped. Always request an alternate method of payment, otherwise you will be liable for the transaction if it is charged back.
• Use fraud prevention tools, like address verification and card verification codes. These can help ensure that the person using the card is the cardholder. At Suncorp Bank, we can enable EMV 3DS, which uses a one-time pin to authenticate the transaction. Contact a Suncorp Bank payment specialist for more details.
• Card not present transactions carry an increased risk of chargebacks because the cardholder does not physically enter a PIN. In most circumstances, you will be liable for the chargeback if the cardholder denies making a card not present transaction.
• Exercise even more caution with overseas orders – they may represent a higher risk with shipping, return difficulties and others, so follow the above guidelines.

2. Create clear return and refund policies

Clear return and refund policies can be fundamental in preventing chargebacks and disputes for your business. 

• Ensure your policies are easy to understand. Avoid complicated words and jargon.
• Be as specific as possible. Include the timeframe for returns, any fees associated with returns and any exclusions.
• Make your policies easy to find on your website and if you have a physical store, display them at the checkout.
• Include your return and refund policies in the receipt.
• If you do not offer refunds, such as for “sale items” or only-in store credits, this must be included in your transaction receipt.
• Ensure credits for refunds are promptly processed and to the same card originally used for the transaction. Delays may result in disputes/chargebacks, associated fees and processing costs.

By creating clear policies and making it easy for clients to find them, you can help ensure a positive customer experience that could protect your business from chargebacks.

3. Ensure your business’ trading name is what customers see in their receipts and transaction lists 

Let’s say you own a café in Melbourne called “Ned’s Café”. A happy Brisbane tourist buys a coffee first thing in the morning. Later, when reviewing their card transactions in their banking app, they see a charge from “Lucky Returns Pty”, a name they’ve never heard of.

This confusion can cause a customer to initiate a chargeback. Avoid it by ensuring your card transaction records display the trading name your customers will be familiar with.

4. Keep online inventory updated

If you sell online, keep your inventory current to prevent customers from purchasing out-of-stock items. This way, you can decrease the risk of a chargeback – customers might find it easier to dispute a transaction than to come to you for a refund.

5. Keep your records on track

Keeping detailed records of all transactions can help you resolve any possible disputes. Details to keep records include:

• customer information
• purchase details
• shipping information.

6. Provide responsive customer service

Customers may start a payment dispute when they’re having difficulty getting a timely response about a customer service issue.

Make sure you quickly and effectively address issues that come your way. Other ways you can improve customer communication are:

• providing many channels to get through to the business – including email, text, chat and phone.
• displaying your contacts clearly so your customers know how to reach you.
• ensuring you return calls and messages and reply to emails.

7. Manage delivery expectations

A delayed shipment can trigger a payment dispute. Ensure delivery information is clear to your customers by:

• providing estimated delivery timings, shipper details and tracking numbers.
• ensuring customers understand whom to contact if their order doesn’t arrive as expected.

8. Respond quickly to disputes

If a customer disputes a transaction, it’s best to respond rapidly to resolve the issue.

If you feel the chargeback isn’t justified, provide all relevant information and documentation, such as invoices, proof of delivery, quotations, emails or any other cardholder correspondence to support your case. 

And be sure to keep track of your chargeback ratio (i.e. the percent of card transactions resulting in chargebacks), identify issues that may be leading to customer disputes and determine how you can prevent these from happening. High chargeback ratios can lead to increased processing costs and may result in the termination of your merchant facility.

Find out more about payment solutions for your business

At Suncorp Bank, we can help you streamline your payment processes and find the best payment system for your business.

Talk to a merchant and payments specialist

Published 12 October 2023