The best way to avoid chargebacks is to minimize their likelihood before you even start accepting payments.
Chargebacks happen when your customers contact their credit card issuers or banks to dispute transactions. Chargebacks can be the result of a misunderstanding or error. They could also be a result of credit card fraud made with stolen credit cards.
There are also several other reasons why your customers might issue a chargeback, including:
- did not authorize charge
- didn’t recognize the charge or merchant on their credit card statement
- were incorrectly billed
- feel the product or service was different than the initial expectation
- never received an item they ordered
By working with your customers, together you can figure out what happened and settle their differences. Additionally you can minimize chargebacks risks by staying organized, being available to your customers and maintaining a transparent relationship with them.
If your customer does issue a chargeback, the cardholder’s credit card issuer or bank will typically refund the transaction immediately. Once the dispute has been made, you will receive an email from Stripe that includes all of the related details. Stripe will then deduct the disputed amount and a $15 chargeback fee from your account the day after a dispute was filed.
If you win the chargeback dispute, the disputed amount and $15 chargeback fee will be refunded to your bank account. See how to manage chargebacks here.
If you incur too many chargebacks, Invoice2go is obligated to close your payment account and disable your ability to accept future card payments.
Here are the most important steps in avoiding chargebacks:
- Give your customers a heads up
- Your customers will see charges from you as “*S*yourcompanyname” on their bank statements. Make sure your customer recognizes your official company name on these bank statements by clearly communicating it either in the invoice or the email that includes the invoice.
- Invoices titled with names other than the official business names may increase the chance of a chargeback.
- Invoices are emailed from your device, which means your sent email folder creates a natural archive for your sent invoices. Keep these safe just in case you receive a chargeback and you need to reference particular transactions.
- If you are sending invoices from the web, which does not include a sent folder, make sure to CC or BCC yourself on the invoices you send.
- When accepting card payments from your customers, make sure your invoices are easy to understand. For example, if you are an electrician and you invoice a customer, don’t use “as34sdB” as a product description when you can say “fixed circuit breaker.”