Invoice2go Problems
Amatista Sheeley
Fortunately, there are some ways to avoid chargebacks. This guide will give you a better understanding of the chargeback process and how you can work to minimize your risk for chargebacks in your business.
A "chargeback" refers to a reversal of payment when a customer disputes a charge on their credit or bank account statement. The concept itself came from the Fair Credit Billing Act to allow consumers to dispute unauthorized charges on their credit or bank account statements.
For instance, if a customer believes they've been charged in error, they may go to their bank and file a dispute. If approved, the customer will receive all of the funds back, though the merchant will have the ability to dispute any chargebacks.
The payment for each chargeback comes directly from the merchant's account. Additional fees usually apply, which is why chargebacks represent such a costly challenge for today's small business owners.
A voided transaction is one that never actually completes. However, in some cases, these transactions can be listed as "pending" on the debit or credit cardholder's account, though only for a short period.
In most cases, the pending transaction will disappear since it had been previously voided, which requires no intervention. But a settled transaction can't be voided, which means that the merchant must either issue a refund or the customer must initiate a chargeback.
Notice that while you, the merchant, have the opportunity to dispute the chargeback, it is ultimately up to the issuing bank. Once a decision is made, the charge must either be settled by you or the customer or go into arbitration. During the arbitration process, the credit card issuer reviews the transaction and makes a final decision.
Unfortunately, there are many times when a chargeback request is made for legitimate debit or credit card transactions. This tactic is broadly referred to as "friendly fraud" since these chargeback disputes lie outside the intended purpose of the chargeback dispute process.
Many customers make so many credit card purchases that they may simply not remember buying from your business. Alternatively, your business name might not appear on the customer's credit card statement. Customers may mistake these transactions for fraudulent purchases and initiate disputes.
Some customers initiate a chargeback because they're unhappy about your product or service. They may find your return process hard to find, or they may simply choose to skip your return policy altogether and file a chargeback. This approach is also common when customers need to return an item despite falling outside the time limit of your return policy.
The customer may also feel that they have been overcharged for the order. This interpretation could mean that they were charged the wrong price, or they were charged twice for the same product or service. Again, rather than contact you directly, these customers file a chargeback with their bank or credit card.
In some cases, the customer may prefer to file a dispute for fear that they've been defrauded in some way by your company. Similarly, products that arrive damaged or defective may prompt customers to dispute the transaction rather than go through your return process.
Chargeback fees can be steep. The U.S. Chamber of Commerce reports that when chargebacks occur, merchants are slapped with a fee ranging from $20 to $100. Depending on your credit card processing company, you could face even higher fees, as some traditional credit card processors are known for including extraneous fees and hidden costs.
The worst part is that your credit card processing company keeps a close eye on the number of chargeback requests your business receives. If you receive too many credit card chargebacks, your processor could suspend your merchant account or terminate it altogether.
How to fight chargebacks
What should you do if one of your customers initiates a chargeback? Remember, you have the ability to defend yourself against illegitimate chargebacks, so it helps to respond quickly to minimize lost revenue.
Your sales records should provide sufficient documentation to determine whether the disputed transaction is legitimate. If you discover that the customer is correct and that the transaction is illegitimate, then you can contact your merchant services provider. Otherwise, you can proceed through the following steps.
If you believe that the chargeback claim is not legitimate, you can reach out to the customer directly to prevent friendly fraud. Ideally, you and the customer can resolve the issue and come to some type of agreement.
Refunds are always better than chargebacks. Post your return policy online, in your store, and on your invoices and receipts. Additionally, include your contact information so that customers can easily contact you if there are any problems involving shipping or the product itself.
Some small business owners rely on multiple sales channels to facilitate business. Allowing customers to return online purchases in-store can encourage customers to come to you directly rather than simply contact their card issuer when there's a problem with the merchandise itself.
For a card-present transaction, always try to swipe or insert credit/debit cards. This step can make it harder to dispute the charges, and it can eliminate human errors that can occur when entering credit card account numbers manually.
Additionally, get a signature for in-person sales. This signature provides proof that the customer accepted the charges at the time of the sale and can prevent friendly fraud by keeping consumers from disputing legitimate charges.
One of the causes of friendly fraud is that customers don't always recognize your business name on their credit card statements. That's because the statement may reflect your merchant account, which may be different from your doing business as (DBA) name.
To prevent friendly fraud, ensure your account name is easy to identify. For instance, if you operate a shop named "Casey's Coffee," make sure your account name is as close to this as possible (e.g., "Casey Coffee, LLC") to avoid confusion.
Every retailer knows the temptation of fudging the numbers to make that big sale. Fast shipping? Sure we can get it to you by Friday. But if you're not able to back it up, your customers might accuse you of false advertising or fraudulent business practices and could file a chargeback to dispute the transaction.
If you're unable to make good on your promises, contact the customer immediately. You might even need to proactively issue a refund for the "fast shipping" that didn't come through. This cost might be painful, but it's better than the fees and hassle that come from dealing with chargebacks and other financial disputes.
Check your messages often! It's possible that your customers are trying to dispute a charge and are unable to reach you, giving them no other option than to file a chargeback with their credit card company or bank.
As a small business owner, it's important to keep yourself organized. That's why Invoice2go offers advanced banking software to help you keep track of your finances, as well as send invoices and receive payment electronically.
When most people get fired their first thought is typically: How do I replace that income, pronto? Their second? At a guess, it's probably: What will I tell my partner? But for Chris Strode, the ramifications of having a few too many drinks at a cocktail party while working in IT at Macquarie Bank actually solved a problem: he'd already managed to make his business Invoice2go a success on the side of his full-time career.
Indeed it did. Today, the mobile platform is available in nine languages and is the App Store's number one mobile invoicing app: 200,000 small businesses use it to invoice more than $1 billion in billings every month. Plus, in the 10 years since he began solely focusing on Invoice2go, it has attracted $50 million from venture capitalists and earned Strode millions.
"For the first five years I did everything myself. I can't say I was ever aspiring to be a boss at all. I was quite happy being an army of one. The pressure on you is less and it's a good lifestyle," he says.
"I knew what I liked and I knew how software developers like to be treated. We try to have a really human approach. If you're having a bad day, or if you broke up with your girlfriend tell us. You don't have to pretend you are sick," he says.
Management style and tips: Relaxed but serious. The balance comes from people not taking advantage of the culture. We have a relaxed atmosphere but we take the business of what we're doing really seriously.
\\\"I come from a family of small business, and Invoice2go was the first app to focus on just solving the invoicing problem, not trying to solve accounting problems too \\u2026 I saw that pain point early on,\\\" he says.
While Strode started Invoice2go before cloud computing and mobile were game changers, but when those did come Strode was quick to embrace them: \\\"I put everything I had into the business,\\\" he says.
\\\"For the first five years I did everything myself. I can't say I was ever aspiring to be a boss at all. I was quite happy being an army of one. The pressure on you is less and it's a good lifestyle,\\\" he says.
4a15465005