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By Charles Zino
My name is Charles Zino, Vice-President of, and I’d like to thank Bob again for providing me the opportunity to share with you some information on ways to help reduce chargeback occurrences. I am hopeful that the knowledge and experience I have gained while working in the e-commerce solutions industry since 1997, both as a software developer and as a management team member of several e-commerce solutions providers focused on supporting MicroISV’s, will provide some insight which can prove helpful to you and your business in an effort to reduce chargebacks.
The goal of this article is to provide basic information on several simple and effective practices collected from our own business experiences, as well as from the experiences of some MicroISV’s we provide our services to. Here are 7 things you need to know about how to reduce chargebacks:

  1. Keep the 2-way street open! Communication is key! One of the keys to any successful relationship is to keep the lines of communication open in both directions. It has been my experience that having frequent communication with your prospective and existing customers is a great way to avoid chargebacks from occurring. In a surprisingly large percentage of chargeback incidents I have been witness to, it eventually boiled down to a very simple miscommunication which was avoidable, provided that better communication took place between the merchant and the customer.
    Some effective communication methods are technical support forums, blogs, and follow-up emails to customers who have purchased your product or service. The key here is to stay in touch with your customers, helping you to stay ahead of any possible issues which could lead to a chargeback. A nice byproduct of this level of effort is that you will be fostering customer confidence and satisfaction, which may lead to return business.
  2. Inform Your Customers On How Their Purchase Will Appear on Statements. Informing your customers about how the purchase of your products and services will appear on their billing statement is a very simple and effective way of reducing chargeback occurrences. The use of effective messaging so that your customer is informed about his or her particular purchase will help in avoiding chargebacks, as customers often assume an unrecognizable item on their billing statement is a fraudulent transaction.
    When using your own merchant account, or if you use a third party e-commerce solution, make sure you have the ability to use soft descriptors to help describe transactions. Soft descriptors allow companies to include customized descriptions on cardholder statements to provide specific billing information, such as the name of the company from which purchases were made, or names of specific products. Providing customized information for transactions makes it easier for consumers to identify charges on their statement, which increases customer satisfaction while reducing the occurrence of charge disputes.
  3. Offer Free “Post-Sales” Purchase Support. A helpful and easy way to provide your customers with feel-good thoughts about their purchase of your products or services is to provide them free, timely, and informative post-sales purchase support via e-mail, forum, or phone. There is no better way to stay ahead of any potential purchase concerns your customers may have than with good, old-fashioned personal attention to detail. Provide your customers with peace of mind by showing them you can quickly address any purchase related concerns they have.If you use a merchant account to process transactions, take the time to make sure you answer all post-purchase inquiries as quickly as possible.
    Additionally, if your business uses a third party e-commerce solution to process transactions, ask questions about their response time for purchase inquiries, and demand the same if not better level of support for your customers as you would expect for yourself! Follow up with customers who have had questions or issues with the purchase process to verify your provider is meeting your expectations and standards. As the old saying goes, you never get a second chance to make a good first impression.
  4. Provide Accurate Descriptions and Screenshots of Your Products and Services on your Website. Providing customers as much information about your products and services as possible will certainly help reduce the number of chargebacks issued, as a large percentage of chargebacks are caused by the customer’s dissatisfaction with the product or service they purchased, whether their claim is accurate or not.
    Having detailed information about your products and services, including screenshots if applicable, can go a long way to avoid your customers claiming that the product they purchased was falsely advertised. Providing detailed information on the products being purchased will help you in the long run.
  5. Provide your Customers with Clear Return and Refund Policies. Informing your customers with information on purchase conditions, as well as stating your refund and return policy might not seem like that high a priority. In fact, I’d venture to guess that quite a few MicroISV’s don’t believe in using the valuable purchase page space on their web site to provide this type information (or even have links to it!). In the spirit of better communication between you and your customers, take steps to inform your customers about purchase conditions and policies to help avoid potential issues down the road.
    Making the commitment to using space on your web site to provide a link to your refund and return policy will help to avoid discrepancies between what your customers purchasing expectations are, and what your purchase conditions state. Managing your customer’s expectations, while announcing your own expectations about the purchase process, will go a long way to helping avoid these types of issues.
  6. What You Need to Know When Disputing Chargebacks. This is always an interesting debate, as one person’s opinion on how to handle these types of situations certainly won’t apply to all MicroISV’s. Some businesses, when faced with the decision on whether or not to dispute a chargeback, will weigh many options before deciding a course of action, and make the best business decision possible. Others will simply not bother with fighting chargebacks, as they feel the work involved is not worth their time or effort. This section is directed at those MicroISV’s who want to “fight the good fight”, and dispute chargebacks for purchases of their product or service which they feel are invalid, incorrect, or otherwise…
    Contrary to popular belief, credit card processors (merchant providers and e-commerce solution providers alike) will NOT automatically assume that a customer who initiates a chargeback is always in the right. Once a chargeback is requested, your merchant provider and/or e-commerce solutions company must allow you a certain amount of time to respond to the chargeback in order to dispute it. Here you will be asked to provide details on the purchase that directly responds to the claim(s) the customer has made with regards to their purchase. If you are armed with the right information, and aren’t afraid to “challenge” the customer, the chances of your winning a chargeback dispute increase dramatically.
    Make an effort to keep all records pertaining to the fulfillment of the product or service you provide to prove it has been delivered, including all correspondence with customers, no matter how trivial that correspondence may be. It will demonstrate your willingness and effort taken to satisfy the customer’s purchase concerns, all while providing sufficient information and evidence to support your side of the dispute. Also, keep in mind that no matter how much information you are armed with, if a chargeback inquiry is not responded to in the allowed amount of time, you will assume the liability.
  7. Cut Your Losses with “Demanding” Customers. Providing a large amount of helpful information focused on refund policies and purchase conditions will certainly help minimize the number of “challenging” customers you do business with, but it will not eliminate them altogether. These types of customers can wreak havoc on your productivity and your schedule. These are people that usually cannot be satisfied, no matter how good your product/service/support may be.
    If an existing customer behaves in ways you would consider to be unreasonable in their demand of a refund or return, you should ask yourself if it wouldn’t make more sense to just issue a full refund, cut your losses, and chalk it up to a learning experience.
    Obviously, issuing a refund whenever someone goes ballistic is NOT a viable solution, as each situation is different. As I mentioned earlier, a surprisingly large percentage of these issues are caused by a very simple misunderstanding. However, a simple misunderstanding can develop into a full-blown 4-alarm fire of a problem in the same amount of time it takes you to spell “r-e-f-u-n-d”.
    Once it becomes clear the outstanding issue(s) will not be quickly or easily resolved, or if the situation degenerates into a “turf war”, make sure you pick your battles! These types of situations simply might not be worth the time, effort or money it would take to resolve. Imagine what you could be doing with that time that could help grow your business! Pretty soon, issuing a refund almost becomes liberating in a funny sort of way.

As I mentioned above, these 7 items certainly do not constitute the end-all be-all list of practices to eliminate chargebacks once and for all. However, based on my experience, these are just a few simple and effective methods to help reduce chargeback occurrences. I hope you can use some of this information to help form your own best practices, and feel free to drop me a line to share your experiences, provide feedback, or learn more about how we have helped our clients implement these practices.
Based in Apex, North Carolina, offers full featured e-commerce payment solutions to software developers around the world. Their management team has over 20 years of e-commerce solutions and product fulfillment experience, and has used that knowledge and experience to create innovative, flexible, and affordable payment solutions. For more information, please visit


  1. We’re getting some weird stuff happening with chargebacks. We’re getting purchases being on credit cards, but the software is never being activated. Week or so later, we get chargebacks on the transactions. It’s been a couple a month. Not a lot.
    And in one case, a card holder actually emailed us to enquire about it, saying that he never bought the software. He lived in Italy. The email address was clearly not an italian persons email (TLD was not italy, username was clearly Russian or eastern European.) But the rest of the information provided for name and address all belonged to this guy. The key associated was never used to activate the software, so we invalidated the key, refunded the guy his money.
    I can see using a stolen card to buy stuff, buy why buy a license for our software and then never activate it. Is somebody just testing the card out to make sure it’s not flagged as stolen, before they run out to their local jewelry or electronics store to stock up on the real goods?

  2. Hi Mark,
    The first scenario might be as simple as customers purchased the software, but never received the product key via e-mail (perhaps a spam filter caught it). It’s possible they could have simply forgotten about their purchase, saw the charge on their statement (using online banking the card is linked to a bank account), and just assumed it was fraud. We used to see quite a bit of that before we implemented soft descriptors. Now our client’s have the ability provide the name of the software title, or their company name so that it appears on the customer’s billing statement.
    I suppose the second scenario you described could be someone that obtained credit card information, and wanted to “test” whether or not the information is valid. Perhaps they didn’t activate the software for fear of there being a “phone home” mechanism during activation?
    Just curiously, have you challenged any of the chargebacks from the first scenario? I’d be interested to know if there is a pattern there which could be easily solved with additional information provided at the time of purchase.
    Charles : e-commerce made easy

  3. Mark: I live in Czechia, use email hosted at (no, .fm is not Czech TLD, that would be .cz) and have a Polish-sounding name. I *hate* over-assuming vendors that do what you just did.

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