ILD Teleservices | Chipping Away At Chargebacks

Chargebacks hurt ecommerce business. A chargeback is a customer-initiated refund that is enforced by the customer’s bank or credit card issuer. They’re initiated for any number of reasons, including technical issues (non-sufficient funds, processing errors, etc.), quality-related complaints (customer claims the goods/services weren’t as promised), or fraud.

No matter why chargebacks are initiated, the fact is, if you’re an ecommerce merchant, they hurt. The process forces you to reimburse the cardholder and pay pricey fees to the bank. What’s worse, chargeback rates may actually dictate the payment forms you’re allowed to accept from customers. For example, most credit card companies require merchants to keep their chargeback levels below 2%–with some requiring even lower rates. Businesses with higher chargeback rates stand to lose their merchant status.

Ecommerce merchants can reduce chargebacks by implementing best practices, such as providing accurate product descriptions and clearly defining a return policy. There is, however, another tool for reducing costly chargebacks: go alternative.

No, we’re not talking about flannel shirts and grunge rock. Instead we’re talking about adding alternative payment methods, like bill to phone, to the shopping cart process. When customers choose this option during checkout, they simply authorize the merchant to bill the purchase to their monthly phone bill, taking the credit card transaction out of the equation entirely.

But ecommerce merchants can’t stop there. It’s critical to find a bill to phone processor with the ability to provide real-time verification of the customer’s identity and account information. By validating personally identifiable info, such as home phone number and the last four digits of the customer’s Social Security number, you eliminate a higher number of the fraudulent orders and information errors that trigger customer-initiated refunds.

Don’t let chargebacks chip away at the bottom line you work so hard to build. Reduce chargeback rates by talking to the bill to phone payment processing team at ILD.

Churn. It’s not a flu-like disease or an itch-inducing insect, yet it often triggers headaches and indigestion in ecommerce merchants. Churn is the term that describes the number of contractual or subscription customers lost in a given period of time. A high churn rate means your team needs to work harder—and invest more money—to convert new customers to replace those that were lost.

Customer churn happens for a number of reasons. Some of it is voluntary, such as when a customer stops buying from a brand because of poor product quality, cruddy customer service, or lack of desired payment options. It can also happen when the customer’s account is uncollectible, leaving the merchant empty handed.

Ecommerce merchants don’t need to live with the burn of churn. Consider these 2 remedies:

1 — Make it easy for the customer to do business with you. In this economic environment, more consumers are choosing to reduce their debt load by reducing credit card use, according to a study by Javelin Strategy and Research. By offering an alternative ecommerce payment solution, such as bill to phone, customers can easily maintain their subscription by using a payment method they’re comfortable with.

2 — Reduce uncollectibles by partnering with an alternative payment processor with a best-in-class, real-time customer identity verification system.  For example, ILD’s iValidate program quickly verifies a consumer’s name, address, and phone number as well as the last four digits of their social security number. The process identifies false sign-ups and bad billing information, which means your company is straddled with less bad debt and fewer billing disputes.

Alternative payment solutions, such as bill to phone, make it easier for clients to do business with your company and, what’s more, they offer a validation system that reduces churn triggered by uncollectible accounts. Talk to the alternative payment team at ILD to learn about their solutions for relieving the burn of churn.