There is no known way to prevent 100% of chargebacks. However, you can protect yourself from up to 99% of them.
How? Preparation. Detection. Response.
This article will show the steps Stripe merchants must take to prevent chargebacks before they happen. They could definitely happen to you.
Preparation
You can integrate many processes into your business that prepare you against chargebacks.
But there’s more to it than just this. Let’s take a look.
Related: How to Prevent Chargebacks: 10 Top Tips.
Clear Communication
First, you must set your customers' expectations about doing business with you.
This is done through crystal clear communications.
Everything you communicate to your customers should be concise, accurate, and understandable. It should also be easily accessible.
Communication extends to your product and service descriptions, return and refund policies, and billing information.
The point is to reduce the likelihood of misunderstandings or dissatisfactions your customers may have, which lead to chargebacks.
You won’t receive a chargeback if your clear policies result in a successful purchase experience. Trust will grow between you and your customers. This trust grows in your community and leads to more sales.
Stripe Tool: Use Stripe’s customisable email receipts and checkout interface to display your business name and contact details.
Detailed Product Descriptions
People want to know what they’re getting.
If your customers receive a product or service that isn’t as described, they may file a dispute, leading to a chargeback.
Make your product descriptions not only straightforward but accurate and detailed.
Stripe Tool: Utilize the Stripe Dashboard to provide detailed descriptions in billing statements.
Secure Payment Gateway
A secure payment gateway helps prevent the unauthorised transactions that often lead to chargebacks.
Your payment gateway must comply with the latest Payment Card Industry Data Security Standard (PCI DSS). PCI DSS is mandatory in Europe and recommended elsewhere.
This compliance helps not only you but also your customers. Their information is safe, and you are not facing multiple chargebacks and fraud problems.
Stripe Tool: Implement Stripe’s secure payment gateway, which ensures PCI DSS compliance.
Use Strong Customer Authentication (SCA)
In addition to a secure gateway, implement Strong Customer Authentication (SCA).
This extra layer of protection is mandatory in the European Economic Area. It is a crucial element for avoiding declined transactions.
Stripe Tool: Implement Stripe’s SCA-ready tools for transactions requiring additional authentication.
Educate Your Team
Ensure your team knows the best practices in preventing and handling chargebacks.
Training them in these best practices is worth the time, effort, and expense. It pays off every time they interact with an unhappy customer.
Stripe Tool: Leverage Stripe’s documentation and resources for team education on best practices.
Detection
Once prepared, you are already preventing chargebacks. However, vigilant, always-on detection is necessary to keep incorrect and fraudulent transactions from becoming chargebacks.
Regularly Review Transactions
Constantly monitor your transactions for unusual activity or patterns indicating fraud or customer dissatisfaction.
This monitoring can be automated by third-party services and studied through Stripe’s reporting tools.
Stripe Tool: Utilize Stripe’s reporting features to monitor transactions and detect unusual patterns.
Track Deliveries
You’ll need evidence to disprove the disputes that come your way. Tracking delivery times, dates, and methods solves the problem of claims that products or services were not received.
Remember: You’re giving the bank the information they need to reverse the chargeback or for you to win the dispute outright.
Stripe Tool: Maintain delivery confirmation records integrated with the Stripe Dashboard.
Use of Fraud Detection Tools
Detecting fraudulent transactions before they are processed is your best defence against them.
Using Stripe Radar with third-party fraud detection services offers a more effective, layered approach to fraudulent transactions.
Stripe Tool: Deploy Stripe Radar for its machine learning and fraud detection capabilities.
Related: Chargeback Fraud 101: What Businesses Need to Know.
Response
Prompt Customer Service
If you’ve invested in clear communications and customer support training, you’ll want to ensure your customers are not kept waiting for service.
Excellent customer service is another crucial factor in customer satisfaction and trust-building in the community. Plus, happy customers come back for more of your products and services.
Stripe Tool: Integrate Stripe’s API with customer support tools for efficient transaction assistance.
Analyse Chargeback Data
Regularly reviewing and analysing chargeback data assumes that you’re collecting all the data you’ll need in the first place.
This layered approach, using Stripe’s tools plus those of third-party chargeback specialists, is your best bet for in-depth analysis.
Stripe Tool: Employ Stripe Sigma for custom queries on Stripe data to analyse chargeback trends.
Use Chargeback Management Services
Consider using specialised chargeback prevention services like ChargebackStop.
ChargebackStop is a crucial part of a successful layered approach to chargeback prevention. ChargebackStop can help you prevent up to 99% of chargebacks before they happen.
Also, note that Stripe charges a fee for every processed chargeback.
A service like ChargebackStop saves you money on every potential Stripe chargeback. Preventing chargebacks before they occur eliminates these chargeback fees plus the loss of the initial sale’s revenue. It also keeps your dispute ratio low.
Stripe Tool: Automate dispute processes using Stripe’s Dispute API for efficient chargeback management.
Conclusion
Factoring preparation, detection, and response into your chargeback defence gives you the best chance of preventing chargebacks from happening.
Using a layered Stripe and third-party approach adds multiple levels of security, prevention, and community trust to your transactions.
