14 Tips for Merchants: Best Practices for Reducing Chargebacks

May 09, 2019 Partner Success
By Owen Linderholm, Senior Content Strategist
By Owen Linderholm, Senior Content Strategist

While chargebacks are unavoidable, the goal of any business is to handle chargebacks properly whenever they appear. That means finding out about potential chargebacks as soon as possible (retrieval), contacting the customer, responding to the chargeback and trying to resolve the issue, preventing the chargeback from getting enforced and having financial impact.

Unfortunately, chargebacks are not going away anytime soon. In fact, according to our survey of over 500 US small businesses, 25% of SMBs have experienced a chargeback – in the past year. So now, more than ever, we recommend that merchants implement proactive measures to reduce the likelihood of receiving a chargeback. An additional advantage is that most of these best practices also improve communication and customer service for a business.

Some payment processors like WePay, will support their customers and merchants through the chargeback process, others will not. But regardless of the support that is given, there are fourteen core best practices to follow with respect to chargebacks for merchants.

  • Make certain your descriptions and promises about products match reality. A product or service not meeting expectations is one of the grounds for a chargeback and you are better off avoiding the potential of a problem in the first place.
  • Make sure your payment descriptor for card receipts and that will go to credit card bills is clear and simple to understand so that customers can easily and correctly identify charges.
  • Ask for ID for in person transactions.
  • Always create and offer digital receipts as well as paper ones – it makes it easier to document later for fighting a chargeback.
  • Monitor for chargebacks regularly and respond promptly – a faster response makes it more likely and easier to head a chargeback off and deal with the issue before incurring extra fees.
  • If you do get a chargeback follow the described protocol carefully and exactly. Have your team learn the chargeback reason codes and chargeback response procedures.
  • For a service business use written contracts and require a signed copy of the contract to make it easier and clearer to handle disputes.
  • Deliver excellent service. Pride yourself on running on a business that prioritizes quality and customer experience.
  • Furthermore, as refunds are less of a hassle to deal with than the chargeback process, we recommend highlighting ways a customer can contact you if they are unsatisfied with the product or service they received. In fact go beyond that and encourage communication – the easier it is for a customer to contact you about an issue the more likely they will take the avenue of a return or refund or discussion with you rather file a chargeback. Include your support team’s email address or 800 number. This will help ensure that customers choose the option that is less time-consuming and expensive.
  • Make returns and exchanges straightforward so that it is easier to do that than try to reverse a transaction and start again. Disclose refund and cancellation policies upfront so customers are aware of policies and their options.
  • Make sure your refund process itself is quick and easy so that it doesn’t add to customer frustration.
  • Improve your card security systems so that you minimize the possibility of real fraud. Take advantage of more advanced technologies like chip cards and security codes.
  • Provide a summary of services, which is signed by the customer. Have your own audit and accounting teams also go over summaries and orders to spot issues like double charging.
  • Ensure you have a streamlined shipping process in place and always set appropriate expectations with your customers as to when they can expect full service or delivery. We also suggest keeping all tracking numbers on items that are shipped out and provide them to customers as well so that delivery issues can be dealt with promptly if they arise.

About the author


Owen Linderholm, Senior Content Strategist

Owen Linderholm is Senior Content Strategist at WePay. He has previously held content and editorial roles at Yahoo, Microsoft, IDG and the BBC.

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