Chargebacks are a common occurrence in the world of online payments. Card-not-present (CNP) chargebacks are a type of chargeback that merchants often face. Merchants must understand what CNP chargebacks are, how they work and how they can be prevented. In this article, we discuss everything you need to know about CNP chargebacks.

Firstly, it’s important to understand that a CNP chargeback occurs when a customer disputes a transaction that took place without the use of a physical card. For example, when a customer makes an online purchase and receives the goods or services without the merchant verifying the transaction in a physical store. The customer could then file a chargeback claim, claiming they did not authorize or receive the goods or services.

One reason CNP chargebacks occur is due to fraud. Fraudsters make purchases using stolen credit card information, resulting in chargebacks when the true cardholder discovers the unauthorized use.

Another reason for CNP chargebacks is friendly fraud. This occurs when the customer disputes the transaction out of revenge, misunderstanding or financial difficulty. The merchant can avoid this type of dispute by providing exceptional customer service, offering easy and transparent returns and refunds policies, and maintaining open and honest communication.

Merchants must have a strategy in place to handle CNP chargebacks. This could include a system of prevention to flag suspicious transactions that are made with the same address or IP address as previous fraudulent transactions. Merchants must also ensure they have a good record-keeping system, including order details, receipts and tracking numbers. This information can be used as evidence to defend the transaction.

Merchants can also resolve CNP chargebacks by responding to chargeback notifications issued by the issuing bank. Failure to respond can result in automatic acceptance of the chargeback. The merchant can dispute the chargeback by providing compelling evidence that the transaction was valid. They must provide solid evidence that the product was delivered and the customer was satisfied. Merchants can also refund the transaction to the customer, which could save time and money.

Lastly, merchants can also prevent CNP chargebacks by providing a clear transaction description on the customers’ bill, which can reduce confusion about the purchase. Merchants must ensure that they have a transparent returns policy that is easy to understand. If the return is hassle-free and provides the customer with all the necessary information, then the customer is more likely to resolve their query with the merchant rather than file a chargeback.

Conclusion:

It’s important for merchants to understand CNP chargebacks and the impact they can have on their business. It can lead to financial loss, increased operational costs, and reputational damage. By implementing strategies to prevent and handle CNP chargebacks, merchants can save a significant amount of time and money while maintaining positive relationships with their customers. Merchants should educate themselves about CNP chargebacks and put measures in place to prevent them from happening.