How to prevent chargebacks and retain retail profits

Customers have every right to initiate chargebacks, but for small businesses looking to grow, it can often feel like they are seriously impacting on potential growth. Luckily, a few changes to the way they operate can reduce financial disputes and help them to hold on to their profits.

There are so many factors to consider when looking at how to prevent chargebacks, especially in the digital sphere where there appears to be something of a chargeback culture developing. The amount of UK chargebacks has increased according to financial data, with 24% of all digital goods purchased in the UK being subject to a chargeback request.

At the same time, large financial institutions are entering into partnerships that may provide unwelcome surprises for small business owners when it comes to chargebacks; an alliance between Visa, Mastercard and PayPal could provide a higher chargeback risk to merchants.

A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read ‘What is friendly fraud and how do chargebacks work?’ to learn more.

Preventing chargebacks can be a case of building consumer trust

So how can small retailers and those that provide services online reduce the risks of being hit by a chargeback request? It seems like an incredibly difficult ask, right?

Not at all; partnering with an experienced payment services provider can help small business owners to optimise the financial side of their business, cut through difficult compliance procedures and introduce simpler ways for customers to pay for goods, allowing them to concentrate fully on running their business.

Developing trust amongst your clientele is one of the most crucial ways to building consumer confidence and reducing the amount of chargebacks you could potentially receive. That can be a tough proposition for digital-only businesses, though. It’s much easier to build relationships in-store on a one-to-one basis with customers. The faceless nature of the internet could make potential consumers wary about the trustworthiness of the service you say you provide.

How to prevent chargebacks and grow your business

Adopting the right payment services which have explicit security measures to combat fraudulent activity and making potential customers aware of them can go a long way to building long-term trust and attracting people to your business.

At the same time, choosing to implement the types of payment methods your market is using can help to build trust as you join the mobile payment revolution. The majority of mobile payment solutions such as Google Wallet, Apple Pay and Samsung Pay are exploding in popularity; particularly because of the additional security they offer shoppers during the checkout process.

Do you have a visible and easy to understand returns policy? What is the relationship like between yourself and your bank? How do you handle financial disputes and is it as painless as possible for the person who has raised the query to have the conflict resolved?

All of these factors and many others are just some of the ways small businesses can fight chargeback culture, keep hold of their profits, grow their business and build stronger relationships with the customers who matter to them most.

If chargebacks are affecting the growth of your small business, partnering with an experienced financial services provider can help you to improve your internal financial systems and build stronger relationships with clients. Contact Fibonatix to find out more.

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