Customer bypass is when a cardholder has an issue with a transaction, and instead of reaching out to the merchant to solve the problem, they go straight to the issuing bank.
Digital merchants face more challenges than physical good merchants when it comes to disputes. Because of the nature of digital goods, how they are delivered, and how customers perceive the company’s customer services all add to the dispute risk. We will go over how customer bypass is one of the factors that leads to digital good disputes and show a few techniques that merchants can implement to prevent this.
What is Customer Bypass?
Customer bypass is when a cardholder has an issue with a transaction, and instead of reaching out to the merchant to solve the problem, they go straight to the issuing bank. A recent Javelin study showed why this bypass would impact merchants disputes so significantly. They found that merchants were able to resolve an issue 56% of the time without a refund, a replacement, or a customer dispute being issued if their customer service was contacted about the transaction issue. Another 28% of the time a dispute could be avoided by refund the customer. Which leaves only 16% of the time where merchants were contacted about the issue, and it still resulted in a customer dispute. These statistics show us that 84% of the time, if merchants can get the customer to contact them, then a dispute can be avoided.
Why Does Customer Bypass Effective Digital Merchants?
In the same Javelin study, they found that 72% of digital good merchant believes that their customers bypass them and go straight to the issuer to dispute the transaction. The nature of digital goods, how they are delivered, and the way they are sold all add to the customer bypassing the merchant. The remoteness of this shopping experience means that it is very convenient for customers, but they also feel a slight disconnect from the digital company. For physical goods merchants, the cardholder may have been inside a store, talked face-to-face to an employee, and they understand there is a physical place they can go if they need a problem resolved. For digital good merchants, most of those aspects are non-existent to the customer. So when a problem does arise with a digital good transaction, the cardholder will reach out to their issuing bank instead of trying to call or chat with the digital merchant’s customer service.
Another reason why customer bypass may happen is the fact that customers will blame the merchant if something goes wrong. Customers believe, the merchants, is at fault for 56% of fraud disputes and 66% of non-fraud disputes. The belief that the merchant is at fault also explains why the customer would instead go to their issuing bank (someone they trust) rather than work with the merchant who they blame for the problem.
How to Prevent Customer Bypass?
The best way to prevent customer bypass is to have excellent customer service that is promoted and easy to access. As we went over, digital good merchants are at a disadvantage when compared to physical good merchants, so it is critical to make customer service as easy to access as possible. There are a couple of ways merchants can do this:
- Put your customer service phone number or email into your merchant descriptor. If a customer has any confusion about the purchase or may question if it is fraud, putting the contact information encourages them to reach out to you instead of the bank.
- Put your customer service contact information everywhere you can. Put it on every email, on the footer of your website, send designated emails, have an online chat available, do everything you can to make it evident that your customer service is there to help before customers have a problem.
- Top-notch customer communication creates a relationship. From the get-go, communicate clearly and continually with your customer. Make sure your return policy, terms of service, and how to get a hold of your customer service is communicated at check out. Then reinforce the message that your customer service is here and happy to help with your other communications
Prevent Customer Bypass with Real-time Resolution
The best way for you to prevent customer bypass is with Real-time Resolution from Chargeback. Real-time Resolution enables the real-time communication of enhanced information to card issuers, which they relay to the cardholder in the event of a dispute inquiry. This enhanced information deflects up to 30% of inquiries from becoming valid disputes. Learn more about Real-time Resolution right here.