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Minimizing Chargebacks: Collaborating with Delivery App Providers | Superorder

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March 26, 2024

Collaborating with Delivery App Platforms to Reduce Chargeback Incidents

Food delivery apps flipped the script on how people dine. The rise of apps like DoorDash, Grubhub, Postmates, Uber Eats and more has benefited both the restaurant industry and consumers. For restaurant owners and merchants, these apps prevent a lucrative revenue source. Meanwhile, diners have more convenience than ever before.

Despite all the good delivery app providers bring to the restaurant scene, they're not perfect. Unfortunately, deliveries are a common source of chargebacks and friendly fraud. Card issuers and banks frequently process chargebacks for diners, resulting in substantial revenue loss for restaurants.

While the food delivery market continues to evolve, restaurants must take action to safeguard business and minimize chargeback-related losses. That requires strategic collaboration with delivery platforms.

Defining Chargebacks in the Context of Restaurant Deliveries

Chargebacks occur whenever a customer disputes a payment with their bank or credit card company. Federal law requires financial institutions and card issuers to offer chargebacks within 60 days of the original transaction.

When a cardholder disputes a payment, the issuing bank or credit card issuer launches an investigation. If your restaurant can't supply evidence to fight a chargeback claim, the money is taken from your merchant's account and returned to the customer.

Furthermore, your restaurant business will have to pay additional fees and may face consequences from your payment processor. The chargeback process is costly, creating a huge source of revenue loss.

Unfortunately, chargebacks are common with third-party delivery apps. Recent studies showed that roughly three percent of all DoorDash and Uber Eats customers request a refund. That might not seem like much, but you must remember that DoorDash and Uber Eats have roughly 37 million and 66 million active users a month, respectively. That's a huge amount of money in losses.

The risk of chargebacks is high with delivery app platforms for many reasons. Because customers often use debit or credit cards to pay for orders, it's easy to work around a standard refund policy. Credit card chargebacks are common. Furthermore, the disconnected nature of ordering through an app makes it a high-risk target for friendly fraud chargebacks. Pair all that with poor communication between apps and restaurants, which could result in numerous order errors, and it's not hard to see why chargebacks are so common.

Common Causes

There are many reasons why chargebacks occur. One of the most common reasons is order inaccuracy. Online ordering can present many hurdles, especially through a third-party mobile application. Poor communication can lead to merchant error chargebacks and quality issues, resulting in unhappy customers.

Another common reason for chargebacks is a less-than-efficient delivery process. Once the food leaves your restaurant, it's up to a third-party delivery driver who doesn't work for you to bring the food to a customer. Things go wrong, and numerous factors can lead to an awful customer experience. Those details are out of your hands, but you'll still feel the effects when you get a chargeback on credit card transactions.

Finally, chargebacks can happen due to plain fraud. Some people try to “game” the system by making false claims. When customers make false claims, they perform friendly fraud chargebacks to get free meals. Others will straight up steal card numbers to make fraudulent transactions. In such cases, false credit card transactions are a form of criminal fraud that is more common than most realize, and it's usually not until a customer sees their credit card statement that they request a chargeback.

The Role of Strong Partnerships with Delivery App Platforms

Collaboration and a strong partnership with the platforms you work with are crucial in reducing chargebacks. Things were much more disconnected in the early days of third-party delivery service. They can still be that way if you don't take steps to form a strong partnership with platforms.

The arrangement can and should be mutually beneficial, but a lack of collaboration can make things more one-sided. Your partners are running a business just like you are. To succeed across the board, you must work together to mitigate errors and create a killer customer experience.

Good collaboration can address many of the common reasons why chargebacks occur, making it easier to reduce your chargeback rate, preserve your restaurant's reputation and ensure that working with third-party delivery platforms is a strong source of revenue rather than a costly mistake.

Joint Quality Control Measures

Quality control should be a shared responsibility. Issues like missing items, inaccurate order details, missing modification requests and more are huge causes of transactional disputes. When customers don't get what they ordered, your number of chargebacks will increase.

Work with your delivery app partners to improve quality control from start to finish. Apps can take measures to prevent errors through additional verification and confirmation. Meanwhile, your team can double-check order details and request clarification when necessary.

The goal is to streamline quality control and ensure it occurs before an order arrives at your restaurant.

Collaborative Strategies To Improve Communication During The Delivery Process

The delivery process can lead to many issues that force customers to request a chargeback. While proof of delivery is common, mistakes still happen. One way to avoid problems is to strengthen communications between the customer, the third-party app, your restaurant and the delivery driver.

Implement systems that allow you to stay in touch via digital channels. If you have any questions during the delivery process, you should have a way to reach out to any party. Whether it's to verify an address or have an estimated arrival time for customers, every party should be well-connected through digital channels to reduce the number of chargebacks you deal with.

Establishing Joint Protocols For Handling Customer Complaints

One area that needs better collaborative solutions is chargeback dispute resolution. This can be a sour subject for restaurants. Third-party delivery app providers often have dedicated customer support protocols that leave restaurants out of the equation.

Work with your providers for a collaborative solution that gets you involved. Having a way to address customer inquiries and concerns can make all the difference. Instead of allowing customers to deal with issues independently with delivery apps, you can take action to make things right and prevent a chargeback.

Implementing Integrated Systems For Order Tracking And Data Sharing

Order tracking and data sharing can solve many chargeback-related issues. It can improve communication, keep all parties in the loop about the ordering process and help identify potential kinks in the chain before they affect the customer.

An integrated system that allows you to share data with your delivery app providers eliminates confusion and information gaps. Traditionally, third-party providers offer dedicated systems and equipment for accepting and processing orders. While those systems are better than none at all, they create a distinct separation between your standard operations and your delivery operations. Furthermore, you may be unaware of key data points relevant to producing a great customer experience.

An integration solution puts everything in one place, and strong data-sharing protocols allow your restaurant to take action whenever necessary. Those integrations and data accessibility can make a world of difference, allowing your restaurant to be more proactive about issues.

Educational Initiatives for Restaurant Partners

One big problem restaurants face when working with third-party delivery app providers is a lack of proper education. Taking full advantage of these partnerships isn't easy. There are many logistics to overcome, tech to learn and processes to understand.

One of the best collaborative solutions available is education. Service providers should have well-designed educational initiatives to teach restaurants and their staff how to make the most of third-party delivery. Meanwhile, restaurants must teach staff the right protocols when managing and processing these orders.

Delivery orders can go wrong in many ways, so your team needs to know how to navigate every potential hurdle. Education is how you get there.

Measuring Success and Continuous Improvement

Finally, delivery apps and restaurants should collaborate to measure and track success. Most providers can easily provide simple data about sales and online purchase volume, but you need integration and collaboration to see the bigger picture.

Adopt systems that allow you to see how delivery orders and the entire process of fulfilling them impact your business. That includes chargeback data. Work with your partners to identify possible opportunities for improvement and take action to maximize success.

Success with delivery platforms requires continual measuring, monitoring and evolution. Ignoring chargebacks and errors will get you nowhere. Even as your team gets into the swing of things, look at the hard data to see what areas of your operation you can improve. Providers should do the same, sharing data to help strengthen the partnership while paving the road to success for everyone.

Get Started With Superorder Today

A great partnership with your delivery app providers is key to effective chargeback management. Payment disputes and friendly fraud are a big source of revenue loss for businesses like yours, and third-party delivery services can cause your chargeback rate to hit the roof. But it doesn't have to be that way.

Try our tips and best practices to strengthen your partnership and make the most out of delivery app platforms while avoiding chargeback requests and chargeback fraud.

When you're ready to change your approach to food delivery, check out Superorder. It's an all-in-one restaurant management software built for restaurants that want to harness the power of delivery platforms without dealing with the frustrating disconnect. Use powerful tools for finances, dispute management, order management and more, all from one easy-to-use place.

See what Superorder can do today and take your first steps toward improving your chargeback rate.

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