PayPal has become one of the most recommended payment systems that have assisted several e-commerce businesses in carrying out transactions between buyers and sellers.
It has been around for some time now and is regarded as one of the most trusted payment systems.
Because of its exclusive appreciation, most shopping and business systems make use of PayPal, by integrating it into their system as a method of payment.
However, even though PayPal, being popular, makes it easy for customers to file a dispute in getting a refund or money from the seller, this could be done through chargeback.
However, the chargebacks phenomenon also comes into play in terms of fraudulent activities, most people with the fraud intention, utilize the chargebacks system as a way of getting money from a merchant or seller.
This is how chargebacks work: A customer contacts the issuing bank (PayPal) requesting the reversal of a particular payment.
Can You Prevent Chargebacks on Pay Pal?
Yes, but It is always advisable as a merchant to follow the requirements that PayPal has set for the seller protection program, the seller protection program can help prevent chargebacks on PayPal.
Aside from helping reduce the cases of chargebacks issued by your customers, it also helps to ensure security for your online transactions.
What Are Chargebacks?
A customer disputes a payment made through their PayPal account. Whenever a customer finds it difficult to identify a payment that has been authorized in his or her account, then such person can apply for a refund of money.
The refund of money simply means that the customer contacts PayPal that he or she didn’t authorize such payment, and therefore, the money will be refunded back to the person’s account after some processes and procedures have been done.
Therefore, whenever you make a payment dispute to PayPal, PayPal will engage in the following activities:
- PayPal notifies the merchant or seller, the person offering the service or selling a product, that a customer has requested a chargeback.
- The merchant, therefore, will provide evidential information, regarding the communication that happened between the merchant and the customer.
The documents that will be provided by the merchant must be accurate information, the documents vary, based on the kind of business transaction that happened between the merchant and the customer.
- The document(s) are sent to the card issuer, for further review and processes, decisions will be taken by the cardholder.
Once the reviews have been successfully done, the cardholder will issue the payment back to the customer account, by debiting the merchant accounts, fees applicable, but are paid by the cardholder.
How Chargebacks Works
Now that you have understood what cashback is, now let’s know how it works.
There are several reasons why customers engage in chargebacks, mostly when a particular product shipped contains some damages, or shipping the wrong product, the customer has the opportunity to apply for a refund of money since the product delivered isn’t what was expected.
A chargeback is a scenario, where a customer requests a refund of money, by going through the financial institution that issued their credit to a debit card, rather than seeking a refund from the business that sold the product to them.
However, as I mentioned earlier, chargebacks are good options for customers but could be a mess for your merchant or seller.
How to Stop Paypal Chargebacks
Since PayPal serves as a middle man between the cardholder and the card issuer, if you are to prevent PayPal chargebacks, then you need to provide the right information to PayPal.
The following are ways, in which PayPal chargebacks can be stopped:
- Providing an accurate description of the item you intend to sell, can be done by stating every feature associated with the product you are selling, adding photos, and short videos will portray a good view by the buyer in knowing what actually he or she is buying.
- Make a defined and clear terminology on refund policy on your website or business platform, and let it be in a place where it will be easily seen and understood by your buyers.
- Ensure to authenticate the refund if necessary, you can make use of the refund feature in the payment resolution center.
- Meet the seller’s protection requirements, if you are a merchant, then you need to consider meeting the seller’s protection requirements.
The seller protection program helps to provide confidence in the merchant, by ensuring the security of online sales, helps to prevent Fraud related trials, and also it helps to reduce chargeback disputes among buyers.
- Provide accurate contact information, this is because, if your buyers can get your contact information, they will be able to contact you regarding an issue, instead of filing a dispute with the financial institution.
What Happens When A Buyer Files a Claim or A Chargeback for An Unauthorized Payment?
Whenever a buyer files a chargeback for an unauthorized payment, the merchant will be contacted through email, requesting the payment proofs regarding the shipping.
At that moment, you will be given a temporary ban on the funds, this is to carry out all the processes involved, once you are verified, you will be given access to the funds back.
What Happens if You Get Too Many Chargebacks on Pay Pal?
As a seller, you must try as much as possible to avoid too many disputes, because you can get temporarily banned from PayPal.
If seemingly, you have a money dispute that needs to be settled, your account will be temporarily frozen by PayPal, to investigate your account.
Once your account is frozen or restricted, you won’t be able to make any in and out transactions, until you are cleared from the disputes.
Pay Pal Chargeback Time Limit
If you have recently received notification from PayPal about a chargeback, you will be given a maximum of 10 days to make a response, with the necessary documents as evidence.
A buyer can request chargebacks, for about 180 days or more, after an order has been placed by the buyer. While it normally takes up to 75 days to review a customer dispute in reverse the amount.
A buyer needs to make much consideration to chargebacks because it does have adverse effects, mostly chargebacks are used for fraudulent activities, probably to get money from a merchant account.
Therefore, as a merchant you must employ all necessary actions that will be needed to be taken to protect yourself from chargebacks, one of the best and most efficient ways is to meet the requirements for the seller protection program.