Chargebacks are unfortunately a common problem for eCommerce merchants. It can be difficult to manage chargeback rates, as they can lead to lost revenue, damage to reputation, and increased fees. Fortunately, there are solutions available to help merchants prevent chargeback and reduce their risk.
Before we dive in, let’s go over what a chargeback is.
What is a chargeback?
Chargebacks are a form of customer protection that gives cardholders the right to dispute a transaction and reclaim their funds if they believe it was unauthorized, incorrect, or fraudulent. They are also used when there is a problem with delivery or quality of goods/services.
When a customer initiates a chargeback, the merchant is informed by their credit card issuer (e.g., Visa or Mastercard). The issuing bank then deducts the amount of the disputed purchase from the merchant’s account and places it in an escrow until the chargeback resolution process is complete. This can take up to 45 days, during which time the merchant must collect evidence and provide it to prove that the charge was valid. If their evidence does not meet certain requirements or is insufficient, then the customer will be refunded and fees may apply.
Chargebacks can have serious repercussions for businesses, as they result in lost revenue, damaged reputation, and additional fees charged by banks and lenders. In addition, acquiring banks may choose to terminate relationships with merchants who have high rates of chargebacks since this can be an indicator of fraud or poor business practices. Merchants should strive to reduce their chargeback rates through prevention methods such as implementing fraud screening services, offering easy returns policies for customers, and providing prompt customer service response times.
Chargebacks are only getting worse
In 2021, thieves and scammers made off with an astonishing $20 billion in ill-gotten gains from eCommerce merchants. That’s a hefty 18% increase over the massive losses incurred just one year earlier! And if that wasn’t bad enough, it looks like chargeback costs worldwide could reach nearly $118 billion by 2023 – no small sum for businesses to bear. Topping this all off? A mindboggling amount of friendly fraud accounts for up to 75% of transaction disputes annually, adding yet another costly layer at about US$25 Billion per annum! Keep your eyes open everyone; online shopping sure has become risky business these days…
How can businesses protect themselves against chargebacks?
Protect your business from malicious fraudsters with an effective, multilayer fraud prevention protocol. Have several screening tools on hand so you can put each transaction through the wringer and flag anything suspicious. Use powerful scoring programs to rank purchase orders by risk level, then review or reject accordingly – that way there’ll be no nasty surprise chargebacks in store for you down the road.
Fighting friendly fraud chargebacks can feel like an uphill battle – after all, you never know what the buyer intends until they initiate a dispute. That’s why it pays to be prepared! To stay one step ahead of scammers and protect your business from unwanted losses, eliminate any internal errors that could potentially trigger criminal or friendly fraud – then gear up for some serious chargeback prevention tactics. With just a few strategic moves in place, buyers won’t see you as easy prey – so don’t forget to arm yourself with solutions before facing off against those determined criminals!
Chargeflow, a solution to handle chargebacks
Get ahead of your chargeback woes with Chargeflow; the ultimate automated chargeback management solution for eCommerce merchants. With Big Data and deep integration with your business, you’ll get custom-crafted evidence to fight back against losses so you can stop worrying about pesky chargebacks – let Chargeflow take care of it in a jiffy!
Chargeflow offers an all-in-one platform that allows merchants to track, monitor and manage the entire chargeback process. It provides powerful tools that allow merchants to identify fraudulent activities quickly and accurately and prevent them from occurring in the first place. With Chargeflow’s suite of tools, merchants can block suspicious transactions before they become chargebacks, ensuring that their customers’ payment information remains secure.
Using machine learning and artificial intelligence algorithms, Chargeflow also detects patterns in customer behavior that indicates potential fraud or other irregularities in payments. The platform also provides real-time alerts when suspicious activity is detected so that merchants can take action immediately to protect themselves from financial losses due to chargebacks. In addition, it has advanced analytics capabilities which allow merchants to better understand their customers’ purchasing habits and helps them identify potential issues before they become problems.
Overall, Chargeflow is an effective solution for eCommerce businesses looking for ways to mitigate the risks associated with chargebacks while providing a safer shopping experience for their customers by preventing fraudulent activities from taking place in the first place. By using Chargeflow’s predictive analytics technology and real-time alerts system together with its integrated point-of-sale system, businesses can reduce their chances of experiencing costly chargebacks while offering their customers more secure payment options at the same time.
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