Are You Monitoring Your Chargebacks?

The current chargeback process is very complicated and subjective. But the move is meant to simplify the process, shorten the dispute resolution time and make sure all parties involved in the chargeback case are protected from both friendly and criminal fraud.

Chargebacks came to life 40 years ago with the passing of the Fair Credit Billing Act that was intended to protect consumer rights.  Several changes have taken place over the last 40 years including the surfacing of e-commerce and digital currencies. These market changes have significantly improved the face of Retail, and we anticipate more developments as new tech comes out and more payment options emerge.

Despite the evolving markets caused by the adoption of new tech, the chargeback process has stayed consistent but quite cumbersome, more so for merchants. And with the high fraud levels, chargebacks affect retailers a great deal, hindering the livelihood and profitability retailers. The process is also very costly and time intensive for banks and credit card companies, sometimes even harming the buyers it was created to assist.

And it seems like the credit card provider and issuing banks’ obsession to please the cardholder has been the main cause if the merchant’s problems. Most of them would rather validate a claim with the little proof a cardholder presents than wait for the retailer to gather whatever info they have on defense. Though key to the process, this increased desire by the issuers to satisfy consumers has also placed pressure on the retailer to refute a dispute as per the issuers’ policies.

Though merchants report fraud and multiple chargebacks as their main problem, situations differ from one industry to the next and that’s why it’s important to have Chargeback insurance. Almost 48% of merchants mention Card Not Present fraud as their primary source. Only 28% blame it on friendly fraud.

The education and travel & leisure sectors reported CNP fraud as the leading cause of chargebacks. On the other hand, most dating and streaming/download businesses discovered that most of their chargebacks are the result of friendly fraud. These are cases where a customer purposely manipulates the chargeback process by claiming that a legitimate purchase is fraudulent.


Although retailers are battling chargebacks, some studies have indicated that companies suffer lack of expertise and funds to help them win the re-presentment course.

Author Bio: Electronic payments expert Blair Thomas co-founded eMerchantBroker, America’s leading Chargeback insurance provider serving both traditional and high-risk merchants. His passions include producing music, and traveling to far off exotic places.