Three Common Reason for Chargebacks Affect Merchant

Posted by Daniel Brain on December 18th, 2017

Are you new to the eCommerce business world or thinking about starting an online business or even contemplating expanding your existing business by opening an online store? If so, you must become familiar with the chargeback system for the simple reason that unchallenged chargebacks have the potential to significantly reduce your profits from online sales and can even threaten the future existence of your business.

It’s not possible to avoid a few legitimate chargebacks; however, there has been a significant increase in friendly fraud and the chargeback system has become a favorite tool for cyber criminals.

THREE COMMON REASONS FOR CHARGEBACKS

The chargeback system exists for the safety of cardholders and the process is more inclined to protect the consumer than the merchant.
One common reason for chargebacks is consumer dissatisfaction with products or services purchased. For example, a merchant might create a tempting online description to easily sell products or services. But, when delivered, the consumer finds that the product or service is not as described or what they expected. The risk of chargebacks from dissatisfied consumers encourages merchants to focus on providing the best consumer experience and products or services possible.

On the rise is deliberate friendly fraud. When a consumer uses their accept credit card  to make a purchase and then disputes the charge once the item arrives with the intention of getting merchandise for free, they have committed friendly fraud. A merchant’s only recourse may be to provide proof that the merchandise was received, so it’s important to keep good transaction records.

As mentioned above, cyber fraud is becoming increasingly popular. Prevention is a merchant’s best line of defense, and a great place to start is by having an e-Commerce website payment system with built-in fraud prevention and detection. With so much news about cyber-attacks and fraudulent credit card activity, most consumers don’t even give a second thought before filing a chargeback.

HOW CHARGEBACKS AFFECT MERCHANTS

Merchants need to take chargebacks seriously because they have the power to negatively affect a business’s bottom line and its eventual survival.
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