What are Chargeback lags? What are its affects on E-Commerce Business
Chargebacks are there to simply protect customers against unusual transactions, but on the other hand, they have serious financial repercussions for e-commerce merchants.
In many cases, chargebacks, where credit card issuers return funds to consumers who oppose a particular transaction’s authenticity, can have long-lasting effects on an e-commerce merchant’s reputation and credit score. In fact, this is not even the worse part. There is something called Charge-back Lag, where there are 45 days between the time a chargeback occurs and the date the merchant is notified. This delay generates several problems for merchants, which in turn makes it even more critical to minimize charge-backs from occurring in the first place.
How the Lag in Chargeback Fees Impacts E-Commerce Businesses
Chargebacks are more than a simple inconvenience. They can also affect a merchant’s short-term financial health through several ways as follows:
-Fines and fees
-Lost revenue and shipping costs from the original sale
-The time and expense of personnel addressing the disputes
However, this is just the beginning. High Risk Merchant Account Businesses can find themselves dealing with the fallout whilst the proceeding life-cycle of the chargebacks takes place like distorted financials, unplanned losses, and masked fraud attacks, months later.
Therefore, due to the chargeback lag, the revenue earned today can’t be confidently (and accurately) recorded until after the chargeback window has passed. It also means that financials and the actual result can be misconstrued for months as merchants drive through the accounting of chargeback losses.
Besides increasing financial reporting inefficiencies, chargeback lags also cause the following:
Mask the source of fraud. Chargeback lag is one of most common reasons for the fraud, because of the delay, merchants may not realise they’ve become a fraud attack victim until it’s too late. This makes it virtually impossible to identify how the fraud occurred, respond to that instance of fraud and prevent future attacks.
Prevent recourse. Because merchants aren’t notified of chargebacks until months after they happen, they can’t promptly respond to the claim and must absorb losses that come long after the original transactions.
Are masked by high sales. During times of high sales, such as during the holidays, chargeback rates may appear low. But when sales level off, chargeback rates seem to climb because of the chargeback lag.
How can you Increase Profitability by Eliminating Chargebacks?
Just like increased Chargeback has certain effects, reducing chargebacks can have dramatic (and positive) effects on a merchant’s bottom line too. When chargebacks are anticipated and prevented, not just high risk businesses but low risk businesses including big companies can also witness increased revenue from:
Minimising fraud losses. With the help of complete fraud protection program, merchants can more reliably flag and stop questionable orders, reducing losses and the personnel cost of using valuable staffing resources.
Avoiding chargeback costs. When merchants can voluntarily issue customer refunds to avoid chargebacks, they also avoid the associated fees and penalties.
Improving the customer experience. When merchants proactively prevent fraud and subsequent chargebacks, they can improve customer trust and solidify relationships.
Approving more transactions. When merchants employ a trusted fraud protection solution, they can confidently approve more transactions, knowing their comprehensive fraud protection will shield them from chargebacks and product losses.
What Merchants, especially high risk payment processors, to decrease Fraud and Chargebacks?
The first step would be to simply figure out a fraud protection strategy, otherwise as merchants you will find yourselves at the mercy of chargebacks and their potentially mortifying effects.
Businesses or the High Risk Merchant Account holders must know that not just any fraud prevention solution will do. There are more measures that must be taken to make sure the prevention of Fraud or Chargeback like keep up with the evolving fraud trends, combine machine learning with advanced human analytics to flag and evaluate suspicious transactions in real time before they’re processed and turn into chargebacks or simply offer a 100% chargeback insurance guarantee that covers the merchant if the fraud solution misses a fraud transaction.
Implementing an effective strategy for fraud protection, merchants can save money by minimising chargebacks and the effect their lags can have on an e-commerce business. As a businessman or a high risk payment gateway owner, you must understand that the financials that might seem fine today, may or may not be the same in the coming few months. Perhaps, its highly advisable to seek assistance regarding Fraud and Chargeback from a professional, like iPayTotal. Don’t wait for the chargeback lag to take its toll before taking action.
Another thing to consider when it comes down to integrating a strategy for fraud prevention into your e-commerce environment, you need to select a strategy that will protect you against possibilities of occurrence of Chargebacks and Frauds in the future. Talk with one of our professional at iPayTotal for more information on prevention of Fraud and Chargebacks.
You can also fill a short form and one of our representative will contact you within 24 hours during the weekdays to assist you further regarding the same. or give us a call on +(44) 800 776 5988, write us at info@ipaytotal.com
In many cases, chargebacks, where credit card issuers return funds to consumers who oppose a particular transaction’s authenticity, can have long-lasting effects on an e-commerce merchant’s reputation and credit score. In fact, this is not even the worse part. There is something called Charge-back Lag, where there are 45 days between the time a chargeback occurs and the date the merchant is notified. This delay generates several problems for merchants, which in turn makes it even more critical to minimize charge-backs from occurring in the first place.
How the Lag in Chargeback Fees Impacts E-Commerce Businesses
Chargebacks are more than a simple inconvenience. They can also affect a merchant’s short-term financial health through several ways as follows:
-Fines and fees
-Lost revenue and shipping costs from the original sale
-The time and expense of personnel addressing the disputes
However, this is just the beginning. High Risk Merchant Account Businesses can find themselves dealing with the fallout whilst the proceeding life-cycle of the chargebacks takes place like distorted financials, unplanned losses, and masked fraud attacks, months later.
Therefore, due to the chargeback lag, the revenue earned today can’t be confidently (and accurately) recorded until after the chargeback window has passed. It also means that financials and the actual result can be misconstrued for months as merchants drive through the accounting of chargeback losses.
Besides increasing financial reporting inefficiencies, chargeback lags also cause the following:
Mask the source of fraud. Chargeback lag is one of most common reasons for the fraud, because of the delay, merchants may not realise they’ve become a fraud attack victim until it’s too late. This makes it virtually impossible to identify how the fraud occurred, respond to that instance of fraud and prevent future attacks.
Prevent recourse. Because merchants aren’t notified of chargebacks until months after they happen, they can’t promptly respond to the claim and must absorb losses that come long after the original transactions.
Are masked by high sales. During times of high sales, such as during the holidays, chargeback rates may appear low. But when sales level off, chargeback rates seem to climb because of the chargeback lag.
How can you Increase Profitability by Eliminating Chargebacks?
Just like increased Chargeback has certain effects, reducing chargebacks can have dramatic (and positive) effects on a merchant’s bottom line too. When chargebacks are anticipated and prevented, not just high risk businesses but low risk businesses including big companies can also witness increased revenue from:
Minimising fraud losses. With the help of complete fraud protection program, merchants can more reliably flag and stop questionable orders, reducing losses and the personnel cost of using valuable staffing resources.
Avoiding chargeback costs. When merchants can voluntarily issue customer refunds to avoid chargebacks, they also avoid the associated fees and penalties.
Improving the customer experience. When merchants proactively prevent fraud and subsequent chargebacks, they can improve customer trust and solidify relationships.
Approving more transactions. When merchants employ a trusted fraud protection solution, they can confidently approve more transactions, knowing their comprehensive fraud protection will shield them from chargebacks and product losses.
What Merchants, especially high risk payment processors, to decrease Fraud and Chargebacks?
The first step would be to simply figure out a fraud protection strategy, otherwise as merchants you will find yourselves at the mercy of chargebacks and their potentially mortifying effects.
Businesses or the High Risk Merchant Account holders must know that not just any fraud prevention solution will do. There are more measures that must be taken to make sure the prevention of Fraud or Chargeback like keep up with the evolving fraud trends, combine machine learning with advanced human analytics to flag and evaluate suspicious transactions in real time before they’re processed and turn into chargebacks or simply offer a 100% chargeback insurance guarantee that covers the merchant if the fraud solution misses a fraud transaction.
Implementing an effective strategy for fraud protection, merchants can save money by minimising chargebacks and the effect their lags can have on an e-commerce business. As a businessman or a high risk payment gateway owner, you must understand that the financials that might seem fine today, may or may not be the same in the coming few months. Perhaps, its highly advisable to seek assistance regarding Fraud and Chargeback from a professional, like iPayTotal. Don’t wait for the chargeback lag to take its toll before taking action.
Another thing to consider when it comes down to integrating a strategy for fraud prevention into your e-commerce environment, you need to select a strategy that will protect you against possibilities of occurrence of Chargebacks and Frauds in the future. Talk with one of our professional at iPayTotal for more information on prevention of Fraud and Chargebacks.
You can also fill a short form and one of our representative will contact you within 24 hours during the weekdays to assist you further regarding the same. or give us a call on +(44) 800 776 5988, write us at info@ipaytotal.com
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