Running a successful enterprise requires you to be vigilant to avoid any issues that can cost you substantial amounts. Fraudulent cases are on the rise today, especially those regarding the use of credit cards to pay for goods and services. Different cardholders have raised concerns about malicious use of their credit cards for transactions they never authorized and other cases. On the brighter side, various innovators have developed several ways for chargeback fraud protection for merchants. However, you need to understand the main effects of chargebacks on your business.
Loss Of Revenue
One of the primary goals you should have in your enterprise is profit maximization. Nonetheless, it can be challenging to hit that target if you keep losing money in your small business. Payment disputes have become a global threat, focusing on small and large organizations. Some buyers have acquired outstanding knowledge of how to dispute credit card chargebacks, but the impact of money loss is still conspicuous across different industries and businesses. Money loss comes because you have to refund the cardholder once they raise a viable dispute about any payments made using their credit cards. That means you will have to take money from your account to facilitate the refund. This can significantly affect your income both in the short and long run.
Generally, a client should file a complaint within 60 days after receiving the payment statement. However, you would be surprised to learn that customers living within 100 miles of your enterprise have one year to demand a refund, as long as they made purchases exceeding $50. In other areas, phone orders are considered local purchases, giving your non-resident clients the power to make refund demands 12 months after buying from your business.
Loss Of Merchandise
The availability of inventory is what keeps your business operational. Some of the most common causes of payment disputes are missed deliveries, making wrong deliveries, delivering faulty products, and orders radically different from the product description. In a nutshell, this means that a buyer has the right to file for a chargeback if they are not satisfied with what you delivered, maybe it be goods or services. If you do not correct that error, you will end up losing the merchandise and the money you used to purchase or manufacture it. With goods, you can ask the buyer to return the item. Nonetheless, that can be challenging if you run a service company. It is hard for a consumer to return a service, but you will still have to refund their money if they are not satisfied with it.
Accounts Closure
As an entrepreneur, you understand the benefits of having a savings account. It even promotes your credit score. However, if you receive many payment disputes, your bank considers your business a high-risk merchant account. In such a case, the institution can close your account even without appropriate notice.
Chargebacks can cost you your business if you are not careful. Fortunately, there are several ways to reduce or eliminate payment disputes. These strategies include shipment tracking, providing enough information to customers, having exceptional customer service, and transaction screening for unusual activities.
