Chargeback is the antithesis to profit. Banks are more focused on keeping their cardholders happy, so even if the merchant is not literally at fault, they must shoulder the brunt of the cost of fees and liabilities such as lost merchandise. It’s especially difficult in ecommerce. Here’s Why.
Credit Card Fraud
While we want to trust out customers, fraud is the most prevalent cause of chargeback. This is the act of a criminal third party, yet the merchant is held responsible for the cost of processing the chargeback. Proper payment gateway service would catch suspicious activity before anyone is charged, but the anonymity of the internet makes card not present transactions a minefield of risks. Ideally, a merchant would have a close enough relationship with its consumers to notice when someone’s habits change before the charges go through your credit card payment system, but this simply isn’t always practical. Suffer from too much fraud, and you can be labeled a high risk merchant account by banks.
Merchandise not Delivered
Things get lost in the mail, but this is also a despairingly common type of scam, and once again the merchant must suffer loss. This is why it’s important to use delivery services with tracking options. Credit card payment systems will already have processed the transactions, but then you’ll have the proof necessary to pursue legal action should the claim prove part of a criminal act.
Computers were made my humans and are therefore subject to human error. credit card payment systems may charge a customer twice or charge when a transaction has been canceled. These are times when communicating with a customer over the phone really helps. (And most customers prefer interacting with a person over the phone, or even e-mail, live chat, anything that reassures them they’re talking to a reasonable human being. Most customers would even pay more if they could interact with a person while arranging their transaction.)
Merchant chargeback protection is essential to a healthy business. Luckily technology is catching up with its own loopholes, but it’s still in everyone’s best interest that Merchants maintain vigilance and positive relationships with reliable consumers.