If you own an eCommerce business, chargebacks are likely to hurt your business sooner than you think. It has become a growing trend globally that continues to disturb businesses at scale. It is estimated that card-not-present chargebacks reach $125 billion annually!
The cost of chargebacks is a pain for merchants, not only is the loss of revenue a concern but customer relationships are also put on the line while additional costs related to payment processing are also brought into the mix. However, with chargeback management and mitigation solutions in place, merchants can counteract chargeback costs and protect their well-deserved revenue.
What are chargebacks?
Chargebacks allow customers to dispute payments that have been made via credit or debit card. Chargebacks in an eCommerce setting operate as a mechanism to protect customers from criminal fraud whilst keeping merchants honest, all to ensure consumer trust in the shopping experience.
The process of initiating a chargeback involves the customer contacting their issuing bank disputing the payment which results in their bank reversing the payment from the merchant’s bank account back to the customer. The onus is then on the merchant to either accept or dispute the chargeback, usually requiring the merchant to compile evidence to dispute the claim. In some cases, the banks involved may intervene if they have their own evidence; however, this is often not the case due to the sheer time it would take banks to investigate each claim.
Now, chargebacks can occur due to genuine reasons when the customer has been a victim of fraud or never actually received their item but nowadays it is more common for chargebacks to be initiated by customers looking to get something for nothing. These types of chargebacks are known as chargeback fraud. This form of fraud belongs to the broader category of friendly fraud chargebacks, which occur when a customer misuses the chargeback dispute mechanism after receiving the product or service they bought without first allowing the business to resolve any legitimate issues. With 60-80% of all chargebacks due to friendly fraud, it is an unnecessary cost that merchants face.
How much do chargebacks really cost you?
Chargeback costs add up for the business as they stand to lose not only payment processing fees but operational costs, marketing costs and even loss of stock. To add to this, credit card chargeback fees are also added to the mix which usually cost between $15-$100 per chargeback. If it is a case of multiple friendly fraud chargebacks then this can have disastrous impacts on businesses as the likelihood of recouping costs without an effective chargeback management solution in place is unlikely.
Additionally, there are non-financial or invisible chargeback costs which can affect businesses as a result of chargebacks. An example of this is the time it takes dealing with chargebacks, including the time it takes employees to gather evidence to dispute chargeback claims appropriately.
Moreover, customer dissatisfaction and damage to the overall brand due to disputes related to chargebacks can affect future sales. Statistics indicate that the average American tells 15 other people when they’ve had a poor customer experience. It becomes quite clear to see why effective chargeback management is required to protect businesses.
What is chargeback management?
Chargeback management and chargeback mitigation for eCommerce entail the process of recovering revenue lost to chargeback while analyzing historical data to prevent future occurrences of chargebacks. Knowing what and where to look for can prove to be a challenge for many eCommerce businesses. It is also important to understand that when it comes to chargebacks merchants do also have rights but without knowing what they are, businesses may struggle to successfully defend themselves against chargebacks. Chargeback management software can help effectively display exactly what you need to challenge disputes however this is still a reactive approach to chargebacks. A more proactive approach would be to find a solution that deals with chargebacks after they are filed. This is where Justt comes in.
Justt’s tailor-made solution
Justt is a custom-made chargeback solution for eCommerce. Regardless of the industry, goods or services a merchant is involved in, Justt can provide chargeback mitigation solutions for eCommerce. Having successfully processed millions of transactions, Justt stands at the forefront of the fight against chargebacks, combining proprietary AI technology and automation to optimize success rates. Using this smart technology, Justt provides a completely hands-off solution with industry leading chargeback success rates.
What’s more, Justt operates on a risk-free business model on a pay-for-performance basis. You only pay once revenue is recovered from successful chargeback cases, there are no other hidden costs. If you are a business that is struggling with chargebacks, contact Justt today for more details.