5 ways chargebacks can negatively impact you

5 ways chargebacks can negatively impact you
Photo by Gemma Evans / Unsplash
Subscribe to my newsletter
Sign up for my weekly newsletter where I share my thoughts on fintech, product management, culture, and travel.

    As a merchant or software company, chargebacks can negatively impact you. Below are 5 ways Chargebacks can negatively impact you.

    1. MATCH List Placement

    Merchants with excessive chargebacks tend to find themselves on the MATCH list, essentially blacklisting them from having a relationship with acquirers, Payment Facilitators, and third-party payment processors; thus, preventing the merchant from accepting payment cards.

    2. Loss of Payment Processing Privileges

    Even if the merchant is not placed onto the MATCH list, the acquirer will most likely rescind their MID (Merchant Identifier) if chargeback rates cross certain predefined thresholds (specific to each acquirer).

    In today’s all-digital world, the inability to accept payment cards can have significant long-standing impacts on the success/failure of a merchant’s business. If the merchant is e-commerce based, the survival of their business is at serious risk because customers use payment cards for most, if not all, e-commerce transactions.

    3. High Fees

    If you are a business with high chargebacks, you likely will pay fees for each chargeback. Fees can range from $25 upwards to $100 for each Chargeback.

    In addition, you may have higher processing fees than peers if you have a high chargeback rate.

    4. Fraud Losses

    You will likely be responsible for any chargeback losses if you are a merchant or a software company. Ultimately, who pays for chargebacks depends on many conditions outside this article's scope.

    5. Manual Work

    Dealing with Chargebacks can be painful. It can involve back and forth with the cardholder, networks, processor, and more. In addition, if you are a large company or merchant, you may even need dedicated staff to focus on chargeback cases. Decreasing the number of chargebacks you receive every month can dramatically reduce the number of hours needed for disputing chargeback cases.

    Additional Reads

    What Is Chargeback Fraud? Criminal Fraud vs. Friendly Fraud
    Chargeback fraud and customer disputes result from friendly fraud, criminal fraud, or legitimate errors. Stop chargebacks and recover losses.
    All About Chargebacks | Fraud Basics and Solutions
    A chargeback occurs when the issuing bank reverses a charge. Learn more about chargebacks, how they occur, and how to win a chargeback dispute.