With the new Visa Claims Resolution in full effect, there is going to be a learning curve or an adaption period for e-commerce credit card processing merchants, particularly those which deal in high risk industries. With Visa, the chargeback dispute process is different than it was prior to April 15, 2018 when VCR took effect.
- A portion of disputes – Visa is predicting 14-15 percent – will never advance to the VCR stage
- More emphasis on information gathering and sharing
- There are shorter windows for rebuttal/response
Without a doubt, e-commerce credit card processing merchants prone to chargebacks will need to work alongside their acquirers closely in navigating the VCR process. High chargeback merchants have a choice, however: to choose to be proactive, to do the work to prevent disputes from getting to the VCR stage.
The new normal: being proactive against chargeback disputes
We get calls several times a week from merchants with chargeback rates of 3, 4 and even 5 percent (sometimes even higher) looking for credit card processing solutions. Indeed, Instabill furnishes e-commerce credit card processing for high risk merchants – we have for nearly 20 years. However, because we work in the high risk niche, doesn’t mean we can arrange payment processing solutions for merchants whose chargeback rates are, simply, out of control.
Acquiring banks are especially leery about taking a risk on a business whose chargeback rate is above the 1 percent of sales/100 per month threshold. Thus, we cannot emphasize proactivity against chargebacks enough, especially in the ‘new’ VCR climate.
How high risk merchants can be proactive
Forgive us if we’re repeating ourselves, but although several of these tactics bear repeating
Clear billing descriptor: The most common cause of chargebacks occurs when the consumer doesn’t recognize the billing descriptor on their credit card statement following a purchase. People simply forget. True, in many cases, the merchant only has a limited amount of characters to describe his business on a descriptor, but that space must be used to the wisest, fullest potential. A telephone number, e-mail and/or website is strongly recommended.
Contact information: Having a dedicated telephone number is a huge plus for reasons we’ll explain shortly. At the very least, merchants should list and monitor all modes of contact on their website (preferably a dedicated page) with said telephone number, e-mail, live chat or a built-in correspondence form.
Consistent contact: E-mail notifications are recommended for the following instances:
- Receipt for the purchase.
- Notifying the customer the product has shipped (with pertinent details such as expected arrival time, shipped ‘from’ address and ‘to’ destination).
- Alerting the customer that the product has arrived.
Clear return/refund policies: Access to your return policy should be easy, preferably a direct link on the front page. Return/refund instruction and policy should be easily understandable. We love how some e-commerce businesses provide return labels and packaging in the case a customer needs to make a return.
The colossal, giant disconnection between merchants and consumers
That telephone reference…let’s explain.
The big disconnect between consumer and merchant during a chargeback dispute is the result of the consumer preferring to contact his/her credit card issuer instead of the merchant. Merchants must continue to be diligent to change this way of thinking, to educate their customers.
They have some impressive statistics on their side:
- Says Verifi, a payments protection and management solution provider, when a consumer calls a merchant to dispute a transaction, there is a favorable outcome 56 percent of the time. That means the merchant is able to solve the issue without having to issue a refund or a replacement product.
- Additionally, 28 percent of the time, the dispute is solved by issuing a refund or replacement product.
- It is only in 16 percent of disputes, when the customer contacts the merchant directly, that no resolution is reached.
Those are very, very telling numbers. But again, how can merchants change the perception so that the customer feels comfortable contacting the merchant directly rather than the credit card issuer?
Better. Customer. Service.
We invest in e-commerce credit card processing merchants
Instabill offers merchants the best e-commerce credit card processing solutions it can find, simply because when merchants are fluidly processing transactions, everybody wins. Have a conversation with a live merchant account manager today about the payment processing solutions we can offer you at 1-800-530-2444.