Reduce Chargebacks: How to Train Teams to Handle Payment Disputes

If your business handles cash or digital payments there’s a good chance that chargebacks are an unwelcome part of your operations. When a transaction boomerangs out of your account it not only results in lost sales and fees but can also put you in danger of higher processing rates or, in some instances, even termination of your account.

Sound familiar? Don’t worry, it doesn’t have to be that way and, the good news is that your staff are the key to reducing chargebacks. That’s because if you train your team to understand why chargebacks happen – and of course to respond quickly – you can put clear internal processes in place. This simple solution will save you tons of cash and will protect your business reputation by reducing disputes over the long term.



In this ZandaX article, we look at important ways you can use training to reduce chargebacks – and protect the revenue, and the reputation, of your business.

Understanding the Root Causes of Chargebacks

Of course, if you want to reduce chargebacks, your team needs to understand why they happen.  Which especially applies if you use a high-risk merchant account. It goes without saying that some disputes can’t be avoided, but many arise from problems that can be prevented. If you keep records of the different causes, staff will be able to respond effectively.

Fraud vs. Friendly Fraud

The term “friendly fraud” might sound like a misnomer but it’s a thing - this is basically when a customer disputes a charge that they claim that they genuinely didn’t make. This is opposed to actual fraud which involves deliberate actions such as stolen cards and fake accounts. Friend or foe - both of these can be a problem for high-risk merchants.

Authorized Issues

It’s important to remember that not every chargeback is a sinister one. If you’ve ever forgotten that you made a purchase (hey, we’re not judging) or someone else has used your card this can lead to a dispute. Because of this, it’s essential that safeguards like clear receipts, email or text confirmations and signed records or receipts are in place to protect everyone.

Customer Service Gaps

When customers don’t receive the service they deserve, they often don’t feel that they should pay for it - and this is the root cause of many chargebacks. Frustration over slow responses, vague policies and poor compliance will all send a customer elsewhere and so it’s vital that your team have the right support training.

Billing Errors and Unclear Descriptors

After a recent stay at a hotel, I was charged $45 for things that I didn’t order or consume. While this error was eventually rectified, it didn’t leave me with a sense of confidence in the company. Similarly, I’ve occasionally had to spend time querying something on my bank statement because I didn’t recognise the name of the vendor.

Charging errors, duplicate transactions and dodgy sounding company names might not seem like that big a deal but they can result in chargebacks and chip away at your reputation. You can avoid this by making sure that invoices, receipts and names are clear, transparent and correct.

Build a Clear Internal Chargeback Process

So, why are your team not on top of chargebacks? The most likely answer is that they don’t have a clear process to follow. By putting in place proper internal systems and processes, you prevent chargebacks becoming an expensive business for your company.

Assigning Clear Roles and Responsibilities

A team only works when everybody knows their job and their responsibilities and this is super-important when it comes to disputes. If nobody is clear about who should be checking for chargebacks and who’s in charge of collating receipts and transaction records, things can quickly descend into chaos. The simple solution is to assign responsibility to individuals or departments and to communicate this properly across the business to make sure nothing falls through the cracks.

Creating Standard Operating Procedures (SOPs)

SOPs (not to be confused with SOBs…) are a really valuable tool for managing chargebacks because they apply methods to the madness. Having proper procedures in place - and a team that knows their roles - helps you to keep on top of documentation and gives you a roadmap for contacting banks as well as knowing how and when to escalate a case. This also really improves staff training procedures.

Setting Response Time Guidelines

It’s a simple fact that chargebacks come with deadlines - and when the clock runs out on one, it can lead to some major headaches for you and your team. You can do yourself a favour here by implementing your own internal response deadlines (ideally between 24 and 48 hours) to allow you to respond fast and earn confidence from banks and your customers.

Keeping Records

A strong regime of document storage is always your best defense! This means keeping everything in one secure, central location. And for in-person sales, having detailed cash drawer logs is extremely useful as proof of purchase. When everything is organized and easy to find, any dispute can be resolved quickly and confidently.

Teaching Teams How to Respond to Chargebacks

All too often, busy staff are simply whizzing the chargeback documents off to the bank and then wiping their hands of it. Well, whether you’re taking a ZandaX Customer Service course, or just using common sense, that’s clearly not good enough. You need to take the time to figure out why a dispute happened.  This means you need to examine the evidence, and learn from each one, and when staff are trained to understand each step of a dispute, you give them what they need to improve success rates and prevent problems in the future.

Understand Reason Codes

Each chargeback claim comes with a code which serves to explain why a dispute has been raised. These can range from fraud, service or product not delivered or duplicate charges and tells you what kind of evidence that bank is expecting from you. If you want your team to know what to do, you first need to educate them on the “why” behind the dispute. It then follows that they can make an informed decision about the claim and respond to the bank in a professional manner.

Collect Strong Evidence

It probably won’t come as a shock to you to learn that the bank won’t accept “because I said so” when a dispute occurs. The success of your case depends on real, tangible evidence which correlates with the reason code.



For online transactions, this may include:

• Delivery tracking numbers or codes
• Customer contact information
• IP address and / or billing verification information
• Clear order confirmation

For in-store transactions, relevant evidence might include:

• Cash drawer receipts
• Footage from security cameras
• Clear acknowledgement of refund policies

Write Clear, Professional Responses

When presenting your case to the bank, you may be tempted to give them a blow-by-blow account of what happened. Don’t. What these busy folk are after is clear, factual evidence which will allow them to make a decision and so, always:

• Go with just the facts - no fluff
• Present the evidence with clear references
• Remain professional and respectful
• Keep emotions in check and never, ever blame the customer

While your indignation may be justified, the bank wants no part of it and so, for the best result, keep things clear, well written, well structured and concise.

Track Outcomes and Improve Future Cases

Although chargebacks are rarely welcome, they are learning tools and so keeping careful track of them can help you to avoid repeating mistakes. Always keep records which show:

• The reason code
• What evidence - and what type of evidence - has been submitted
• The final outcome
• How much money was involved

In all likelihood, you’ll quickly see patterns emerging - for example; “most disputes are down to fraud” or “the majority are simple billing errors”. This then allows you to make changes and improvements to nip the triggers in the bud.

When to Fight vs. When to Accept Loss

You may be familiar with the saying “pick your battles” and this very much applies to chargebacks. When a battle’s not worth fighting, there’s little point in wasting time and energy on it so train your team to evaluate the following:

• How strong is the available documentation / evidence ?
• How much is the transaction worth?
• How much time and work will be involved in making the claim?
• How likely are you to win

Unlike in the films, the underdog doesn’t always win in real life and sometimes the smart thing to do is to take the hit and move on. Training your staff to know when to fight and when to back down saves time and effort and, over time, improves the rate of successful recovery.

IMAGE 5 – Executive making a wise decision

Creating a Prevention-First Payment Strategy

Chargebacks are a necessary evil for businesses that work with cash drawers and point of sale transactions and, as with so much else, prevention is much better than cure. When your staff are constantly fighting disputes, it saps money, time and energy which could be channeled elsewhere. It therefore makes good business sense to train employees on the importance of protection to save their time, your revenue and, most importantly, retain customers for long-term growth.