How we reduced chargebacks by 30% (as a percentage of sales) | Hacker News Reader

How we reduced chargebacks by 30% (as a percentage of sales)

37signals.com

80 pointsbrm23 comments

I think some gateway APIs let you set the descriptor on a per transaction basis. That seems like the ideal solution.

Probably the most effective way to reduce mistaken chargebacks would be to let the user specify part of the descriptor. They could say "Ask Peter" or something, so if the accounting department didn't recognize it they would ask Peter or "Ask IT" or whatever.

Being able to add a PO number to the description would probably help at many companies.

This would absolutely help many companies.

I saw this first hand at a company that I worked for. For accounting, you take the receipt and file an expense report. That goes into quickbooks. Then you get the credit card statement and have to go line by line and match it up with the items that were expended. It would consume many hours each month.

I get very uneasy when I see a '-' in a url. Something really spammy about it. I'd be inclined to just cancel the transaction on seeing that url.

It's like watching a commercial for eMusic or something and seeing their site advertised with an arbitrary number in front of the service's name, like 73emusic.com. That url doesn't really exist, but I've seen it a bunch of times before.

I couldn't agree with you more. There was a comment posted on the blog about why they didn't go with charge.37signals.com instead. I would think this would be better since it contains the real domain. I too am curious why they didn't use the subdomain route.

I think the problem with a domain like charge.37signals.com is that many users don't understand how to type it in the address box (e.g. some will add www before it). If you've watched users try to enter URLs with subdomains in the address box you've likely experienced this.

Good point, I didn't even think of that and it is true. One option would be to add a CNAME entry for the www portion on the subdomain. That way if someone did it would route correctly.

They could also purchase the full domain name (charge37signals.com) and have it redirect to charge.37signals.com; that way they account for all possible permutations.

That's true, but probably only for a very small group (HN readers and the like)

A good example of thinking outside the box. I didn't think customers who were charging back "37signals" would actually take the trouble of going to "37signals-charge.com", but I guess the numbers prove me wrong.

However, the 30% reduction is 'as a percentage of sales'. Since their sales grew in 2008, maybe more sales, more '37signals' specific marketing, and the fact that they've been around a year longer meant more awareness of the '37signals' brand, which directly led to fewer chargebacks?

that's assuming that most of their chargebacks were simply because people didn't recognize the charge. how many were because they didn't like the service, didn't get support, or some other reason?

with most credit cards, you don't really need to have a good reason to do a chargeback. especially with american express, they side with the customer rather than the vendor.

american express sent me some paperwork when i signed up for a merchant account and it basically said when a customer does a chargeback, they refund the money immediately and i would have little or no recourse to debate it.

If people didn't like their service, wouldn't most of them ask for a refund (which would not be classified as a chargeback)? I believe chargebacks are usually intended for charges that the customer thinks are fraudulent.

a refund would have to go through 37signals, and they don't give refunds (http://www.37signals.com/refund). a chargeback just avoids the middleman and gets the customer his money back.

A lot of companies say they have no refund policy in public, but will refund if a customer complains enough or threatens a chargeback (just because it's so annoying to deal with).

A company like 37signals needs to say they don't give refunds to deflect complaints regarding if you close your account half way through a month.. "Why don't we get half this month's payment back?" etc, which would be an administrative nightmare.

If prorating your service is an "administrative nightmare" you have issues.

Amex is actually the only one who settled a dispute in our favor, but that probably doesn't mean much since I usually don't bother to contest chargebacks.

When you say "in our favor," are you speaking as a vendor or a buyer?

Vendor, I guess. Why would he contest a chargeback as a buyer.

It's also worth noting that if you process payments at large scale, you might also have some fraud-related chargebacks. No matter how you customize the descriptor, you can't completely eliminate those, because the person receiving the bill actually didn't buy the product.

true, but when doing SaaS it's less of a problem since you can just shut down or downgrade the account.

Sounds like a branding problem. Why have "37signals" at all if people don't recognize it?

Their charge explanation page (http://37signals.com/charge) looks semi-targeted at whoever pays the bills, who isn't necessarily the person who purchased or uses the product.

This phenomenon is extremely common. Most users seem to either call everything by the product name or by the company name. For example users will refer to Office or Windows as MS or refer to MS as Windows. At my current employer some of our users refer to our product and company by the name of the product and some refer to the product by the name of the company.

What would you propose they change the name of their company to?

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