Payment reversal is one of the biggest challenges that online businesses face. In fact, it’s such a big challenge that many business owners have to budget for it every month. There are several reasons why payment reversals occur, but most of them can be prevented with the right strategies.
But what exactly is payment reversal, and how can you prevent it? Let’s take a closer look. This article will discuss payment reversal and the best ways to minimize it to keep your business running smoothly.
What is Payment Reversal?
Payment reversal (also known as “credit reversal” or “reversal payment) refers to situations when the funds from payment are returned to the sender or cardholder. This occurrence can be initiated by the merchant, cardholder, issuing and acquiring banks, or the card association.
Common Reasons Why Payment Reversals Occur
Payment reversals can happen for a number of reasons, but most often, it’s because of the following:
- The payment was unauthorized or fraudulent.
- The item is sold out.
- The customer changed their mind after ordering
- The product wasn’t as described.
- The customer never received the product.
- The transaction was a duplicate.
- The cardholder was charged the wrong amount.
12 Best Ways to Prevent Payment Reversal
The harsh truth is that payment reversals are part of doing business online. No matter what you do, they will tend to happen every now and then. Even a foolproof payment system isn’t safe from payment reversals since it’s mainly due to human error.
Fortunately, there are ways to minimize their occurrences and their impact on your business. With that said, here are 12 of the best ways to prevent payment reversal:
Link Your Future Transaction Messages with Your Authorization Request
Having a transaction identifier (TID) is useful for ensuring that requests and their related messages stay with each other. That way, you can quickly figure out what’s going on if payment is reversed.
Make Sure the Product Is in Stock Before Accepting an Order
There’s nothing more frustrating for a customer than ordering a product only to find out it’s sold out. So to avoid payment reversals, make sure you have enough stock before accepting any order.
Use Accurate and Detailed Product Descriptions
This is a common cause of payment reversals. If your product descriptions are inaccurate or misleading, customers will be more likely to return the product and ask for a refund.
Use a Surface Trace Audit Number
This feature involves attaching a number to communications in every transaction. You can keep track of all the messages related to payment and quickly resolve any disputes.
Make It Easy and Convenient for Customers to Contact You.
If customers have trouble reaching you, they’ll be more likely to request a payment reversal. So make sure your contact information is easy to find and that you’re responsive to customer complaints or inquiries.
Keep Track of Your Duration Limits
If you have a time limit on returns or refunds, make sure you keep track of it. Otherwise, you may accidentally accept a return or refund after the limit has expired.
Use a Secure Payment Gateway
Using a secure payment gateway is one of the best ways to prevent payment fraud and payment reversals. By doing so, you can ensure that only authorized payments are processed. As a result, you’ll have fewer payment reversals and chargebacks.
Monitor Your Account for Suspicious Activity
Keep a close eye on your account for any suspicious activity. If you see something fishy, contact your payment processor or bank right away. That way, you can prevent payment fraud and payment reversals.
Educate Your Employees
Make sure your employees are educated on payment processing and fraud prevention. By doing so, you can minimize payment reversals and chargebacks and avoid any potential financial losses.
Follow the Card Association’s Guidelines
Every Card Association has its own set of rules and guidelines. By following these guidelines, you can minimize payment reversals and chargebacks since you’ll be adhering to the rules set by the card associations.
Use Clear Billing Descriptors
A billing descriptor is a text that appears on a customer’s statement after making a purchase. Using clear and accurate billing descriptors can avoid payment reversals due to payment disputes. For example, if you’re selling software, your billing descriptor should say something like “Software Purchase” instead of just “Purchase.”
Process Authorization Referrals Quickly
Finally, if you detect any type of error with a payment, make sure you process the authorization referral quickly. By doing so, you can avoid payment reversals and chargebacks. At the same time, you can also improve your customer’s experience and even acquire new ones along the way.
BONUS Tip: Use ReliaBills!
If you’re running a business, payment reversals are the last thing you want to deal with. To avoid payment reversals, use ReliaBills—one of the country’s leading invoicing and payment processing platforms!
While our system can’t prevent chargebacks from happening, it does provide features that let you know when it happens so that you can resolve it right away! Once a payment fails or reverses, our system will notify you about it so that you’ll be aware of the situation when it occurs.
ReliaBills helps you combat payment reversals using the following features:
- Recurring billing: Once your clients enroll in AutoPay, you’ll be able to collect payment from them automatically whenever their billing cycle renews. That way, you won’t have to break a sweat whenever you collect payment from your customers. We’ll handle it for you!
- Chargeback recovery: ReliaBills will let you recover chargebacks quickly and efficiently. We’ll also take care of all the paperwork so that you can focus on what’s important—running your business.
- Automated failed payment recovery: If a payment fails, our system will automatically retry to collect payment from your customers up to three times. If the payment still fails, we will send an email to them about the failed payment so that they can fix the problem and update their payment information. If the problem is on your end, we’ll notify you right away so that you can resolve the issue and get back to earning money!
Note that these features are only available when you upgrade your account to ReliaBills PLUS (our premium version). At just $24.95 per month, you can enjoy all of these features and more! For more information about our services and offerings, click here.
By following the tips mentioned in this post, you can minimize payment reversals and their impact on your business. Payment reversals are inevitable, but you can avoid them as much as possible by taking the necessary precautions.
And with ReliaBills, you can streamline your reverse payment prevention strategy to further minimize its occurrence. You can even recover from them quickly and efficiently! So what are you waiting for? Get started with ReliaBills today!