While we were preparing this issue's lead article on chargebacks, Bill Hoidas, product development manager at Matrix Payment systems, coincidentally emailed this note. We appreciate him for sharing his perspectives on this important topic:
"Chargebacks are an ever-present threat to ecommerce and other card-not-present businesses, and their numbers keep growing. Few merchants can ignore them. Left unchecked, chargebacks can be devastating to a merchant's bottom line and can cost them their relationships with their payment processors. To fight chargebacks effectively, you need a comprehensive system for chargeback management.
"When fighting chargebacks, the burden of proof is on the merchant. So it's essential to have a system in place to respond to chargebacks within the allotted timeframes and provide the necessary evidence to have them dismissed. "An effective chargeback management system requires strategies, tools, human resources and expertise. You must understand what chargebacks are, how the chargeback process works, and how to determine whether to handle chargebacks in-house or outsource to professionals.
"If a merchant offers no rebuttal after a consumer initiates a chargeback, the charge will be reversed and refunded to the customer. If the merchant challenges it, the chargeback enters a chargeback representment phase, where the merchant can offer documentation and other evidence that would prove the original charge was valid.
"The true cost of a chargeback is far more than the amount of the original transaction. Aside from the loss of overhead and other costs involved in facilitating payment transactions, banks require merchants to pay chargeback fees. The true cost of a chargeback can be up to 200 percent of the original amount. Also, processors have chargeback thresholds for merchants. Consequences to those who exceed thresholds range from additional fees to account termination.
"No one-size-fits-all chargeback management solution suits every merchant. Look for a system that will produce the best results ‒ as measured by ROI metrics. If you're winning chargebacks, recovering revenue and seeing your overall chargeback rate go down, your system is working."
Please tell us whether the information here and in the lead article is helpful at firstname.lastname@example.org. And send along your perspectives on other compelling issues in payments, too.
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