I currently run a webshop over at www.otbmods.com
E-commerce, where card not present transactions are the norm, is
inherently more risky than card-present retail business. And while
it's certainly a problem, it is a managable one if you take steps to
reduce your risk, which I'll get to a bit later.
In my specific case, the percentage of transactions charged back has
been less than 1%. For me, one out of every 500 or so transactions
results in a chargeback.
Generally speaking, lower value orders are NEVER victims of
chargebacks. It's the higher ticket ones that seem to be more popular.
Reviewing my chargeback history, the majority of them hover in the
$100-$200 range, with one up at $600. I don't have a single chargeback
for less than $50.
Reasons for chargebacks vary, but a few were the result of stolen
cards being used. In those cases, the purchasers supplied completely
valid information, including the card verification number and proper
billing address. But the shipping address provided was in Malaysia
(which should have been an instant red flag). They also chose the most
expensive and fastest shipping method, another red flag. That was back
at a time when I didn't check transactions as closely as I do now, and
both of those resulted in chargebacks.
The rest of the chargebacks stem from users claiming they never
received goods, with one or two (a minority) claiming they didn't make
the purchase, and a couple from users who weren't satisfied with the
goods supplied.
Learning from your mistakes is a big part of dealing with chargebacks,
and I've been very fortunate in this regard. My chargeback numbers
have been on the decline since I've been in business, and that's the
direct result of the following things I do to help reduce chargebacks
and protect myself when they do happen:
1) Use the address verification system (AVS) as well as CVV card
verification numbers.
2) Ensure that the billing and shipping addresses match
3) Use an IP metrics system to check the location of the IP address
the order was made from and compare it with the shipping address
provided.
4) Avoid shipping to "High Risk" Countries , such as Belarus,
Colombia, Egypt, Indonesia, Lebanon, Macedonia, Malaysia, Nigeria,
Pakistan, Ukraine, or Yugoslavia
5) And while I don't personally do this, the Verified by Visa and
SecureCode systems help eliminate the "I didn't buy that!" factor
While it might seem obvious, good customer service and communication
is as effective as anything else at preventing chargebacks. Shipping
things promptly and not charging the customer's card until you ship is
a must. Be accessible to answer your customer's questions and reply in
a helpful and timely fashion. Also, use a trackable shipping service
for tangible goods (This is a MUST if you want to be able to dispute
chargebacks and win) and provide accurate descriptions and pictures
for all of your products.
Hope that helps answer some of your questions, feel free to ask if you
want to know anything else!
-Adam |
