As card payments continue to grow, merchant chargebacks have become an increasingly costly challenge for businesses of every size. In addition to losing revenue from disputed transactions, merchants often bear the responsibility of proving that a purchase was legitimate—an administrative burden that can be especially difficult for smaller businesses with limited staff and resources. The rise of e-commerce and friendly fraud has only intensified these challenges, making effective chargeback management an essential part of protecting profitability and the customer experience.
Merchants carry the ‘burden of proof’ in chargeback disputes:
- In a chargeback scenario, merchants must identify the item, date, amount, and buyer
- Merchants are required by law to respond within 30-45 days or the chargeback is automatic
- Smaller merchants lack both the time and staff to track down transaction level details
- If a merchant can’t carry the burden of proof, they lose the revenue, merchandise, and time spent
- An appeals process exists, akin to an appellate court, and if the merchant wins they keep the sale revenue
- U.S. card transactions have surged 47% in the last four years
- In 2020, the U.S. will clear 66 billion transactions for $4.7 trillion dollars
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Data for today’s episode is provided by Mercator Advisory Group’s report – Merchant Chargebacks Are on the Rise Due to Friendly Fraud.”
About this chargeback report
Merchants find themselves wrestling with the process, which is triggered when consumers dispute a purchase transaction, mostly on e-commerce sales. Increasingly, friendly fraud has also become a direct cause of merchant chargebacks. This report delves into reasons and implications as well as vendors of chargeback services that have emerged to provide solutions for merchants.
A new research report from Mercator Advisory Group, Merchant Chargebacks Are on the Rise Due to Friendly Fraud assesses the challenges and preventive solutions for this increasing problem that affects merchants of all sizes across vertical markets.
“Merchants are incurring a major pain point dealing with consumer-disputed sales transactions that can lead to chargebacks. This can mean merchants lose not only the sales revenue but also the merchandise and related overhead costs as well,” commented Raymond Pucci, Director, Merchant Services at Mercator Advisory Group, the author of this report.
This report is 14 pages long and has 2 exhibits.
Companies mentioned in this report: ACI Worldwide, American Express, Authorize.Net, BlueSnap, Braintree, CardinalCommerce, Chargeback, Chargebacks911, Chargeback Gurus, Chargehound, CyberSource, Discover, Ethoca, Federal Reserve Board, Lexis-Nexis, Mastercard, Midigator, PayPal, Stripe, Verifi, and Visa.
