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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.”
When consumers dispute a credit card transaction, Merchants lose 4 times or more:
- Obviously, the merchant loses the sale (#1), but they also lose the merchandise (#2)
- Merchants have to eat the shipping costs (#3), as well as the labor to ship
- Lastly, merchants lose the overhead of manually reviewing the transaction (#4)
- If things go really bad, merchants might pay chargeback fees to the acquiring bank
- Merchants can be dropped entirely or labeled ‘high risk’ if they have too many chargebacks
- According to Lexis-Nexis, merchants lose $3.13 for every $1 in product value lost to chargebacks
About this report
Merchants find themselves wrestling with the chargeback 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 chargeback 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.