In the world of e-commerce, there are risks and rewards at every turn. The good news is that eCommerce business owners can leverage online marketplaces to sell their products directly to consumers. The bad news is that when transactions happen online, there’s also a lot of opportunity for fraud, chargebacks, and other risks. 

With numerous ways for customers to pay with credit cards and other digital payment methods, it’s easy for ecommerce businesses to automate and accept payments online and process them through an intermediary like Stripe or PayPal. But to stay profitable while mitigating risk, eCommerce business owners must be aware of some simple but effective measures against fraud, chargebacks, and other financial risks. So without further ado, let’s look at ways to prevent fraud, losses, and chargebacks.

1. Use risk management tools for fraud detection

If you’re going to accept credit card payments on your ecommerce platform, you’re going to have to deal with credit card fraud, but that doesn’t mean you need to let it go unchecked. Fraud detection tools usually offered by your payment processor help you quickly identify potentially fraudulent transactions and take action to protect your business. 

Whether you use Stripe or PayPal, you should be able to quickly identify risky transactions. Credit card transactions that look suspicious for various reasons, including the customer’s location or the type of transaction, are flagged and often prevented from being completed. 

Seon’s Risk Management


These tools don’t catch every fraudulent transaction (no tool is 100% accurate), and sometimes, legitimate customers are falsely flagged. But if you accept credit card payments, you should be using fraud detection tools to help catch problem transactions before they become losses. Have a look at seon’s risk management tool list to see the best risk management tools to use in 2022. 

2. Use SSL and risk-based authentication for credit cards

One of the simplest ways to protect your business from credit card fraud is to ensure your website is using SSL. This security protocol encrypts sensitive data, including credit card numbers, so that it cannot be read or manipulated by hackers or malicious bots. 

But SSL isn’t just a way to protect customers. It’s also a way to protect your business. Credit card issuers often use risk-based authentication to help determine whether or not a transaction is fraudulent. 

Risk-based authentication looks at several factors, including the location of the customer, the IP address of the customer, and various other details, to determine if a transaction is valid. SSL ensures that the data needed by risk-based authentication tools are encrypted and unavailable to businesses like yours. If you accept credit cards, you should use SSL on your website.

3. Be transparent about return policies

If you accept credit card payments for products and services, you’ll likely be required to issue refunds for dissatisfied customers. In some cases, you may be issued a chargeback for that refund. Be transparent about your return policies and make them available for customers to see. 

Don’t make people dig for this information; it should be there on your website for everyone to see. This will help ensure customers know exactly what to expect if they need to return a product. 

If you have a no-questions-asked return policy, be sure to mention that, too. If a customer accidentally purchased the wrong item or discovers they don’t like what they purchased, your no-questions-asked policy ensures they can return the item without hassle.

4. Communicate with customers about shipping times

Shipping Products

There are many ways to ship a product, including using a common carrier (Federal Express, United Parcel Service, etc.), a third-party logistics provider (like DHL, UPS, or a regional delivery company), or an e-commerce business’ own shipping department. 

You have to tell your customers how you’re shipping their purchases, and you need to be transparent about your shipping times. This helps customers know when to expect their purchases and, if they don’t receive them on time, it gives them a clear line of communication to follow up about their order. 

If you’re using a third-party logistics provider or a common carrier, there’s not much you can do to control the shipping times. But if you’re shipping the items yourself, make sure you have the appropriate staff and capacity to meet the shipping requirements of each order.

5. Offer digital receipts to ensure transparency

Some customers want a tangible receipt for their purchases. Others don’t care whether they get a receipt or not. If you’re running an eCommerce business, you’ll likely be required to provide some form of proof of purchase, whether that’s a paper receipt or a digital receipt. 

Digital Receipts

Your digital receipt should include the purchase transaction ID (found on the statement of your online payment processor), the date, the amount, the products or services purchased, the name and contact information of the merchant, and the customer’s email address. 

Your digital receipt doesn’t have to be fancy. It should be straightforward, with as few bells and whistles as possible. It should ensure transparency for your customers, but not overwhelm them with useless information.

6. Make sure your seller account is secure

Using an ecommerce hosting solution marketplace like Amazon, Shopify, or Etsy to sell your products is convenient, efficient, and cost-effective. But it also creates a new set of risks for your eCommerce business. A fraudster could hack your seller account to change shipping information or increase the number of items they steal. 

If you’re selling on an online marketplace, make sure you’re using two-step verification and other security features offered by the platform. You should also periodically review your seller account, looking for any unusual activity that could indicate fraudulent activity.

7. Don’t process payments until the shipment has been confirmed

Some customers will purchase products as gifts for loved ones. Others may buy a product for their use and then find that they don’t like it. In either case, you may have to issue a refund. Some businesses have strict return policies, while others offer no guarantees at all. 

While you can’t prevent customers from wanting to return an item, you can decide how you’ll handle those returns. If you’ll accept returns, be sure to state that on your website. If you’ll accept returns only under certain conditions, be sure to state that, too. 

If you require customers to return an item before they can get a full refund, make sure they know that. If you’re accepting payments before the customer has returned or received the item, you may be setting yourself up for a chargeback.

8. Be careful with international orders

International customers may want to purchase your products, but this presents a unique opportunity for scammers. Be careful with international orders, especially if you accept payment via digital currency. 

You may want to require a valid credit card or debit card for purchases made by customers in the United States. If you accept international debit or credit cards, be extra careful.

Hackers steal international credit card information and may use it to buy from your e-commerce website. Later on, the owner of the card will realize that their cards have been used illegally and this will result in chargebacks.

It is important to ensure that you are using the right payment method and that the payment gateway is registered with your country’s banking authorities. If you’re using a credit card, make sure that the company or bank where your credit card was issued has a billing address in your country. You may also want to check the country of origin of the company or bank where you purchased from, as this will help you determine if they were involved in any illegal transactions.

9. Keep your books organized with good data

Well Organized Data

Having well-organized data in your eCommerce system helps you identify ecommerce mistakes and has a big impact on your bottom line. You can use a spreadsheet to keep track of what you’re selling, but it’s good practice to use a data warehouse to store that data. This is where you’ll find all the information about your products, as well as information about the customers who are buying them. You can also use a tool like Econsultancy to create a custom report for this purpose. Use the data to: 

  • Know Your Competitors: The competition for your product or service is always going to be fierce. But it’s not something you need to worry about if you have a good online marketing strategy in place. As long as you take care of these things, you should be able to keep up with the competition on price and quality.
  • Be Sure To Use It Right: Always remember that every single item in your eCommerce system may be different from what people are ordering online at one time or another. This means that every order has unique characteristics that make it unique and different from others in the market. If something doesn’t work right, or if it’s not working at all, there’s nothing worse than

Bottom Line

If you’re an eCommerce business owner, you’re likely accepting payments online. This means you’re also likely dealing with credit card fraud and chargebacks. Fortunately, there are ways to keep these threats at bay. 

If you accept credit cards and sell products online, you’re bound to encounter credit card fraud and chargebacks. But you can also prevent them by using SSL, being transparent about your return policies, and communicating with your customers about shipping times. For extra protection, use risk management tools to detect fraud, and make sure your seller account is secure. Be careful with international orders, and don’t forget to keep your books organized with good data.

This article is based on the opinion and understanding of the writer solely. It may include marketing or affiliate links for your convenience. Please review our Terms & conditions.
Article by:

Cosmas alias Cosii-Riggz is a technology enthusiast and SAAS writer who helps clients understand products by explaining services for businesses. He has been featured in websites such as PV Magazine and Bitcoin Kenya. During his free time, he likes traveling to new places and exploring what's new on the internet.


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