Across the Board

Blog on e-business and online payments.

Tricks reducing chargebacks in your SaaS

You may like it or not, but you will have chargebacks in your web business. I’m sure about that.

No matter what. Even if you think that everything is fine in your SaaS, you offer great product and best possible customer service, there will be always someone who won’t be happy with it. Unfortunately that’s how life works.

Even if there is no chance to reduce the number of chargebacks to zero, there is a couple of tricks that could reduce it to minimum.

Let’s have a look at them.

Relevant transaction descriptor

Ask your payment provider what your descriptor looks like. Or even better, pay for your own product and look at your credit card statement. You shouldn’t find there something like “Payment #1423749” or the name of your payment provider.

That should be a description of your business / product. Your product’s name is That’s what your descriptor should look like.

There is also one more interesting trick for the companies that sell several online products and don’t want to have several descriptors… one descriptor with an URL address to the place where the customer is able to find more information about all the products the company sells. Take a look at this phenomenal example: How we reduced chargebacks by 30%.

Inform your customers about the payment

If you charge your users automatically, let’s say month by month, you should inform your users about that. It would be best would to do it at these four stages:

  1. On a pricing page
  2. In your Terms of Service
  3. Before you charge your customer (let’s say a day or two before that)
  4. Just after you successfully charge your customer

More security

When you ask your user to provide their credit card details – ask them to provide all the card details (credit card number, name on card, expiration date) and CVV/CVC.

Also what is worth recommending – unfortunately not in all markets – is to implement 3d secure. Sure, sometimes that could reduce the conversion a bit, but what’s really important – it could reduce the chargeback risk (especially chargebacks with a fraud reason) to minimum.

Have your contact details wherever it’s possible

You should put your contact details (email address, telephone number) really wherever it’s possible. Not only on your website’s contact subpage. You should also have it in your website’s header or footer and on your transaction’s descriptor (your telephone number).

Verify whatever you can

Most chargebacks are caused by fraud. The most powerful way to protect against fraud chargebacks is implementing 3d secure, but there are also lots of other ways that could help.

I would suggest implementing some simple anti-fraud functionality in you SaaS. Functionality that could reject transactions from people that are more risky. Let say you have a user that wants to pay for your product providing you an email address from some free email provider (e.g., and is from a more risky country (let’s say from some country in Africa). You should think twice before accepting such a transaction.

If you accept payment on your own website (through payment provider’s API) – verify card expiration date also.

Detailed descriptions of what you’re selling

It’s not so easy to provide a detailed description of a SaaS product. But itís a really important thing, so take some time and take care of it.

Put some pictures and screenshots on your website. Give a detailed list of functionalities your user can find in your product.

Also, offer some trial period or demo of your SaaS product, so that users have a chance to use your service before they pay for it. Or at least offer them a money-back guarantee.

Do not offer annual plan if you are not 100% sure about it

Sure, annual plans are great for everyone (for customers, because in most cases they can have a discount if they pay for a whole year at once; and for SaaS owners, because they can earn more right now and donít need to wait for a payment until next month).

But what’s really important… a customer may issue a chargeback 6 months after the delivery of the service. If you are paying now for a new pair of shoes – you have 6 months to issue a chargeback. Since now. But in case of SaaS business (where you have monthly or annual subscriptions), you’re delivering your service for the whole period of subscription. So if your customer pays now for a monthly subscription – he has 7 months to issue a chargeback (since now). If your customer pays now for an annual subscription – he has 18 months to issue a chargeback (since now).

Offer refunds

Sure, I know that no refund policy is something popular recently. But you know what? There is no better way to protect against chargebacks. No matter if you’re selling material products through your ecommerce site or digital goods like in case of a SaaS businesses. It’s absolutely #1 way to reduce chargebacks in your web business.

If your customers aren’t happy with your products or services, they will want to have their money back. And they will get their money back. One way or another. Trust me… for you, as a SaaS owner, it is much better to give them the money back by refund.

That’s the next post of Build a great global SaaS business series – the brand new blog post series on Across the Board. Want to know more? We will publish much much more in the near future. Subscribe to our newsletter or hashtag #GlobalSaaS on Twitter and be first to know.

Have some additional questions? Or maybe an idea for a next blog post about SaaS businesses? Don’t hesitate to tell us about that. On Twitter (remember about #GlobalSaaS in your tweet) or in comments below.


Experienced executive, people-oriented leader, doer, entrepreneur. CEO at PayLane. Business educator on Also on Twitter.

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