High Chargebacks? Lower Them To Avoid Merchant Account Termination (Pt. 1)

High Chargebacks? Lower Them To Avoid Merchant Account Termination (Pt. 2)


High chargebacks ruining your business? Last week we published part one of blog and provided some great strategies to prevent chargebacks from terminating your merchant account. Well, we have more great tips to help you avoid an online business disaster, so here is part two.

Is your help desk or customer support page helping?

The purpose of your help desk or customer support page is to minimize calls, emails, refunds and chargebacks from your customers. The following items should be included on that page.

  • Contact information (include a customer service phone number, and an email or contact form to get in touch with you).
  • Customer service hours and typical delays for responses (don’t forget to indicate your time zone).
  • FAQs (list common questions and answers to reduce incoming customer inquiries).
  • On the first page, answer the following question: “What is the charge I see on my credit card for?” (it should be immediately clear what the customer purchased to prevent a call to his bank).


DirectPayNet - Avoid chargebacks with effective customer service


Avoid chargebacks with responsive and effective customer service

Customer service can make or break your business. It can also affect your chargeback and refund ratios. Are you outsourcing your customer support team? Is the quality of service a good reflection of your company? Do the hours of operation allow your customers to reach you during reasonable or extended parts of the day? You and your team should address all of these questions while setting up your high risk merchant account.

Many merchants spend tons of time perfecting their marketing and business practices to achieve high volume sales. Unfortunately, they neglect the potential losses that can incur when unsatisfied customers ask for refunds or even worse, contact their bank and issue a chargeback. Acquiring banks charge a chargeback fee so you’re actually losing even more money. Worse, you may see extra revenue lost for a referred sale that became a chargeback if it came from an affiliate to whom you paid commission.

An effective and available customer service team can actually be a “profit center.” Looking at it as a “cost center” will definitely make you skimp on important details, such as hours of operation and hiring qualified well-spoken customer service agents. Training support agents on how to save customers and upselling other products or services can increase your bottom line and profits!

More to come on best practices for customer service in a future DirectPayNet blog post! Stay tuned!


Is forced continuity costing you money?

Free trial offers, forced monthly continuity and unclear billing terms can increase short-term profits. However, if not managed correctly it can spell trouble for your merchant account providers and authorities if enough complaints are received. This shouldn’t dissuade you from trying new billing practices or offers for your customers. There are legitimate well-run businesses that offer free trials and forced monthly subscriptions. The key is to learn how to market your product before trying these billing practices.

This could mean spending some additional time understanding how to entice your customers to buy without signing up to a free offer or forcing them to a long-term commitment. The benefit of this is twofold. First if you are able to generate even a low profit, it will be the proof of concept you need to push forward. Second, obtaining a high-risk merchant account is easier when you’re not offering free trials or forced subscriptions. It will allow your payment processor to get to know you and your business, and build trust. When you decide to try a new billing practice, your processor may be more willing and able to support your new business model.

Obtaining a high-risk merchant account with no previous processing history is hard. It’s even more difficult and expensive with a forced free trial, monthly subscription product. You may have high reserves and outrageous transaction fees to pay in order to get a payment processor to allow you to get started.

Mismanaging a free trial or forced monthly continuity program may actually be less profitable than initial sales figures may suggest. Most merchants don’t realize that. DirectPayNet often sees processing statements with 20% or more in lost revenue due to refund and chargeback fees. Keep track of profit (especially net) not just sales figures.


In conclusion…

Keeping a high-risk merchant account safe and operational is a big concern for most online business owners. Getting shut down because of high chargebacks can be costly. Therefore, tread carefully. You may have to put your converting offer on hold. Affiliate relationships might be lost while seeking alternative processing solutions. Future revenue from customers on subscription offers could be lost. This is why a conservative product or service launch might result in a few good lessons that will save some time and money when driving aggressive marketing campaigns.

Was your merchant account shut down due to too many chargebacks? Need an expert to help you with refunds and fraud reduction?

Contact DirectPayNet for a free consultation to get your online business back up and running today!

About the author

As President of DirectPayNet, I make it my mission to help merchants find the best payment solutions for their online business, especially if they are categorized as high-risk merchants. I help setup localized payments modes and have tons of other tricks to increase sales! Prior to starting DirectPayNet, I was a Director at MANSEF Inc. (now known as MindGeek), where I led a team dedicated to managing merchant accounts for hundreds of product lines as well as customer service and secondary revenue sources. I am an avid traveler, conference speaker and love to attend any event that allows me to learn about technology. I am fascinated by anything related to digital currency especially Bitcoin and the Blockchain.