eSIM chargebacks are what no service provider wants to ever deal with. Yes, they look like refunds, but basically, they’re not.
A refund keeps your business in control, but a chargeback involves third parties like the issuing bank, card networks, and payment processors. What’s worse?
The involvement of these third parties often comes with dispute fees and potential penalties. This is why retailers of a digital product like eSIMs cannot afford to take chargebacks for granted.
In the eSIM market, delivery is instant and physical proof is limited, so chargebacks may happen often and can cause severe losses. However, in this article, you will discover how to prevent chargebacks and disputes for eSIM purchases to keep your profit margin higher.
Why are Chargebacks Important Topics for eSim Providers?
As an eSIM provider, your business operations deal with telecommunication, software delivery, and payments. An intersection of these three concepts makes the risk profile of eSIMs a unique one.
Why does that happen?
- Delivery is rarely physical but mostly digital, and this makes it easier for customers or eSIM scam fraudsters to initiate disputes.
- eSIMs provide instant fulfillment; therefore, there’s only a little tolerance for perceived errors.
- Although you can use them anywhere, there can be issues with regional laws.
Generally, however, most chargeback disputes are filed under complaints like “service not received” or “unrecognized charge.” Having this understanding is important, as we will go deeper into how to prevent chargebacks in the next section.
Chargeback Prevention Strategies for eSim Products
Are you wondering how to prevent disputes and chargebacks that can negatively affect your business? Try any of these steps.
Post-purchase Follow-up
Most eSIM chargebacks and disputes in the eSIM market occur within days or even weeks after initial purchase. Following up immediately after purchase can reduce the likelihood of a dispute.
How do you follow up? Most successful follow-ups usually address the following issues.
- Help the customer understand exactly what they purchased and what the eSIM can do or not do.
- Help them activate and use the eSIM.
- Help them know how to get help before contacting their banks.
If you can address these concerns immediately after purchase, it can drastically reduce dispute rates.
Reducing Checkout Fraud
In the e-commerce industry, checkout fraud is one major concern all over the world. Fraudulent users initiate payments, receive automated delivery of products, and then initiate chargebacks via their banks or processors.
To protect your eSIM business from eSIM fraud without losing out on legitimate customers, you can deploy the AVS system. The Address Verification System (AVS) helps you identify mismatches between billing country, device location, and IP address.
Many fraudsters often try to manipulate one of these pieces of information to hide their identity or location. Other techniques to employ include the CVV or the postal code verification.
Use Clear Communication to Reduce Expectation Gaps
It just has to be said. Many eSIM chargebacks are not actually cases of eSIM fraud but are due to unmet customer expectations.
eSIMs are a relatively new product, and most people have yet to understand the product fully. For instance, some users may assume that service coverage extends to every region of the world.
Also, they may assume that activation is automatic or that any device supports an eSIM service. It’s your job as an eSIM retailer to educate the user, but how?
You can do this by clearly explaining to the customer the coverage of the eSIM service and its limitations, device compatibility requirements, and how to activate the eSIM. When they understand what to expect, they’re least likely to get dissatisfied enough to tender a chargeback request.
Design Your Refund Policies to Easily Resolve Disputes
When your customer’s bank reviews disputes, one thing they consider is your dispute policies. When your policies are vague or inconsistent on the issue of disputes, settlement of disputes often goes against you as the merchant.
To avoid such situations, clearly define the eligibility criteria for a refund based on usage or activation. Also, differentiate between unused and partially used eSIMs, and make it easy for customers to understand the refund policy before purchase.
You know, when you issue strategic refunds early and on your own terms, it usually costs less than contested chargebacks.
Have a Responsive Customer Support Team
Many customers only contact their banks when they feel ignored or stuck with the support team. To reduce cases of chargeback disputes, your support team has to be very responsive and easily accessible.
With live chat or call features and easy identification of support channels after purchase, you can help resolve many disputes before they escalate.
Limit the Occurrence of “Unrecognized Charge” Disputes
It will surprise you to know that some eSIM chargebacks result from the user’s inability to recognize the transactions on their statements. How can you work on this?
Use clear and consistent merchant descriptions. These branding descriptions should be the same across the board, like in your email, website, checkout, and receipts.
Avoid using generic or unrelated transaction names. That’s because recognition clears confusion, and when confusion is out, disputes reduce.
Let’s Get it Done
It doesn’t matter if you’re a PSP-heavy businessperson, fintech operator, marketplace owner, or someone who wants to take advantage of the booming eSIM market; preventing chargebacks is a serious operation. With the ideas discussed above, you can protect your business without losing the goodwill of your customers.
If you’re looking for a white label eSIM platform that offers premium support through all the technicalities involved in this process. Get in touch at hello@limitflex.com today.
