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

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


For 10 years DirectPayNet has been advising merchants on various payment related topics and the most common question is about chargebacks. We get asked, “What can I do to lower my chargebacks and refunds?” There are some simple things you can do to help reduce chargebacks and fraud in your merchant account, but it’s not easy.

No merchant wants to lose money or experience issues with his/her merchant account providers and processors. Obtaining a high-risk merchant account can be a long process with lots of paperwork involved. That’s why keeping an account is very important to all merchants.

One of the keys to maintaining your payment processing relationship is reducing chargebacks. Here are some tactics to achieve that!

Prevent chargebacks by reviewing and testing your checkout process!

Want to reduce your chargebacks? Review your sales flow to ensure there are no issues with your website. Test it on every browser and viable version that is relevant for your audience.

Ensure you have a thank-you page once your customers have finalized their purchase. This page should confirm the purchase and any next steps, delays in receiving the product or a login link to a members’ area.


Email your customers before they call their bank

Ensure your terms and conditions authorize use of communication with customers via their email address. Once a purchase is complete, email your customer the details of their order and how to access the product if it is digital or an expected delivery date if shipping a tangible product.

Use a email deliverability platform (or even a few) to ensure your email messages to customers are getting delivered to their inbox and not their spam folder. Evaluate bounce backs and assess if these orders look fraudulent or signal a potential issue. A big indicator of fraud is a fake email address, so when in doubt issue a refund and cancel the order or customer access to your program.merchant account termination

What do customers see on their statement?

Sending email confirmations and reiterating the description of your product or service on your checkout page will stop any confusion when your customer gets his credit card statement. This is what we call credit card descriptors. Descriptors are pivotal in preventing chargebacks. Ensure you are as descriptive as possible so your customer recognizes the purchase from your website.

For online businesses it’s best to have a URL descriptor to ensure your customers can go online to get support. Keep it as short as possible and never go over 22 characters. No need to include the www. Also, try to make it a .com so its easier to recognize it is a website URL.

There is also a field on the credit card statement where merchants can include the city where the purchase was made. This can be used for a customer service phone number if you do not have a physical location that customers would recognize. Keep this field under 13 characters. If using an 800 number, don’t include 1, as this will exceed the character limit and potentially cause your number to be incomplete.

Once your merchant account is live, it is very important to test with every card brand (Visa, Mastercard, Discover, etc.) you accept. Ensure the descriptor on the credit card statement is complete and displayed accurately.


Is your supply chain working perfectly all the time?

So you converted a customer. Great. Now only to ship the product and you’re good to go, right? Not so fast.

Many business owners take orders from all countries. This is great, as we live in a global economy; however, shipping delays and import laws may work against you.

Do you know how long it will take for your product to reach another country if you ship from the US? If you have enough of a demand, it may be worthwhile to set up a shipping facility in that country to ensure timely order delivery.

Also, can your product be imported without additional duties in your customer’s country? Some edible products may be perfectly legal in the US but have ingredients banned in other nations. Look into this prior to selling to a particular country.


What countries are your chargebacks from? 

The country of origin of your refunds and chargebacks can be a good indicator of a potential problem with shipping, duty fees or import laws in another country. A little bit of online research or a trusted attorney can help you determine how viable a certain market is prior to entry. We often see merchants shut down for high chargebacks, but upon further analysis the problem sometimes stems from non-US customers.

Try a test order with shipping to an address in a foreign country to check for potential issues. When in doubt, avoid selling in that location. If you charge your shipper, it is important to do shipping tests. Test shipping practices on a regular basis to help investigate possible complications. We suggest quarterly tests in all your major markets.

We have more tips coming in part two of this blog. For now, if you have any thoughts or questions, leave them in the comments.

Tell us about your merchant account chargeback pain points and how DirectPayNet can resolve them by emailing right here!

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.