Chargebacks are a real pain. By the time returns, administrative costs, loss of future business with the customer, and other liabilities are accounted for, the estimated cost to merchants is nearly triple the amount of the sale—$270 for every hundred dollars in chargebacks.
As many big retailers shutter storefronts and divert consumers to online channels, online payment risk mitigation expert Chargebacks911 says the move could do more harm than in good in the form of lagging customer service and increased chargebacks.
Chargebacks—credit card sales that are cancelled or denied by the customer, forcing a reverse transfer of funds from the merchant to the issuing bank that authorized the transaction—are a persistent and a growing problem with card-not-present credit card transactions. As of January 2013, MasterCard estimated that more than 5% of all transactions become chargebacks.
Chargebacks911 says reliance on e-commerce, the chargebacks issue could be a rock in the water. In addition to customer services-based chargebacks such as refunds for returned items, credit card fraud of all kinds is on the increase.
The Company is seeing increased awareness of the risks as larger retailers look to its firm to mitigate risk by dealing quickly and effectively with chargeback, thereby allowing their customer service reps to focus on the number-one priority in retail today—providing a great customer experience.
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