Reduce chargebacks with eSMS

Richard Raw

11 May 2021

As a business owner there are many things you need to consider from product selection, marketing, pricing and all the way along the customer experience.  Obviously, a primary concern for any business is revenue production and ultimately, protection.

No matter what you sell, or how you sell it, there is always a chance the customer is going to be unhappy.  Whether there is a problem with the item itself, or they have simply changed their mind, customers are entitled to request a refund.  In face-to-face situations, this is usually achieved by the customer returning to the store with their item and associated receipt.  This gives you, as the vendor, the opportunity to either simply replace the item or refund the funds in question.  Importantly, it also gives you the chance to have the item in question returned to you – potentially for resale, depending on the reasons for the refund.

However, when it comes to selling online, this is not always the case.

What are chargebacks?

When a consumer purchases something online, they are going on faith that the item is precisely as shown or described.  Sometimes items are not correctly displayed, equally, there are times when customers do not pay close attention to the associated descriptions.  There may be situations when the items are perfectly suitable; however, they have become damaged in the delivery phase, or a customer has merely changed their mind about their purchase.

In some situations, a customer will contact you directly, and arrange to have the item returned and the associated monies refunded.  However, there are some situations in which a customer may initiate a chargeback scenario, which ultimately leaves you, as the vendor, somewhat powerless.

A chargeback is something that can be initiated if a card payment has been made, and is a powerful consumer protection offered by banks.  Although customers are obligated to initially contact the business first to discuss refunds and returns, this does not always happen.  As a result, it is possible that you, as a vendor, may not be aware there is any form of dispute on the account until the bank requests the funds back from you.

Generally speaking, these chargebacks are rare; however, in cases of fraud or stolen cards that have been used to purchase goods, the business is the one who suffers at the end.  The thief obtains their goods, the card holder receives a refund, and the business is out of pocket through the loss of the fraudulently purchased item.

With eSMS payments the risk of this occurring is significantly reduced and the onus is placed back on the customer.  During this type of transaction it is the customer’s responsibility to enter their own personal information (e.g. address), thus ensuring, from the merchant’s perspective that the customer is the genuine card holder.

As a business, you will not at any point have access to their financial information, which means there is no opportunity for your systems to be hacked, and your customer’s details to be used fraudulently by a third party.

These things make eSMS far more secure from a consumer’s perspective, and equally reduce the risks of financially costly chargebacks to you, the business. To find out more about reducing chargebacks, or using eSMS as a payment option, contact ePay247 today.