Chargebacks happen. It?s a reality all online businesses must face. Fortunately, there are several ways to greatly reduce the chance of having chargebacks. One such way is to use chargeback protection for ecommerce. While many online merchants feel that it?s unnecessary, this type of system can save you a lot of time and money in the long run.
If you are skeptical about the importance of chargeback protection, you may not fully understand the true cost of a chargeback and how it damages your business.
Here are a few ways in which chargebacks cost your business big time.
The average online purchase transaction is around $78. That is because many American consumers shop in bulk in order to save on shipping costs or receive discounts. At this transaction amount, a single chargeback claim could end up costing you a three-figure fee.
A lot of chargebacks happen as a result of technical errors or mistakes on the part of the merchants or issuing banks. Of these chargeback incidences, credit card loses totaled $16.31 billion in 2014 alone. It is important to note that this figure does not take into account losses covered by consumers or the staggering amounts merchants had to pay in chargeback processing fees.
What?s worse is that even if a customer simply files a chargeback against you, you will be charged a processing fee up to $30. This claim may not even be accepted but you will still be responsible for that processing fee.
In addition to the money you will be paying in fees, your company will lose its most valuable asset: time. Studies show that businesses spend about two hours evaluating each individual chargeback, taking time away from business itself. That means productivity is bound to drop. Systems that provide chargeback protection for ecommerce will allow you to easily store and access the necessary documents to handle chargeback situations. However, without this system, evaluating and resolving chargebacks could take a lot longer than two hours.
As online shopping becomes more and more commonplace, you may see a rise in your online transactions. This, of course, is great news for your business ? until you?re slapped with a chargeback. That is why you need to make sure you?re protected.