Connect with us

Finance

The Downsides Of A Chargeback

The Downsides Of A Chargeback

Credit cards are quickly becoming the number one way to make purchases. It used to be that credit cards were almost only used for expensive purchases, when a buyer could pay a purchase off over time. However, credit cards are becoming more and more popular. In fact, it’s pretty hard to do some things without using plastic- shopping online, reserving a vacation, etc.

What is it that makes these cards so attractive to people? Is it their compact size? Maybe it’s the essentially ‘fake’ money behind them? Or, maybe it’s both. Whatever the reason for the outburst of purchases via credit, doesn’t matter. What matters is the credit card companies’ solution for their customers’ problems – chargebacks.

The Downsides Of A Chargeback

The Purpose of the Chargeback

A chargeback is basically a refund to the buyer, if anything happens to go wrong with their purchase. This idea is a great reason for the credit card holder to feel secure when making a purchase, but it is turning sour for merchants.

When Chargebacks are Issued

A buyer can ask to be issued a chargeback for seemingly any reason – the product didn’t ship on time, they received poor customer service from a company, the product wasn’t what the buyer expected, or the purchase was a case of fraud. Let’s take a look at each circumstance individually.

  • The product arrived late. When a customer orders a product online, they are not likely to read into the shipment process. “Ships in 3-5 days” doesn’t really mean the item should arrive at the buyer’s house in that amount of time; it means the product will leave the warehouse in 3-5 days, and then be delivered.
  • Poor customer service. This doesn’t seem like a very good reason to immediately ask for a chargeback. A problem with an employee can usually be sorted out by speaking to someone of a higher authority, like a supervisor.
  • The buyer was unsatisfied with the purchase. If a person isn’t happy with an item bought from the marketplace, they bring it back to the store for a refund. Why wouldn’t an online purchase be handled the same way?
  • The purchase was fraud. In the situation of the ‘F’ word, it is obviously acceptable for a card holder to demand a chargeback.

Aside from fraud, all other reasons for a chargeback could also be disputed with the merchant, rather than the credit card company. It seems that customers are becoming lazy. The reason this is important is because just a few chargebacks could do some permanent damage for a company.

What a Chargeback Means to a Company

Customers don’t realize the potential damage they are doing when they go through their credit card company rather than the merchant for a refund. When a chargeback is issued, a merchant has to repay the amount of the item, plus a hefty fee. And most of the times, the merchant never receives the product they refunded, so is at a loss for a resale.

Here’s the kicker, if a company is hit with too many chargebacks (two percent of their total sales), then the credit card processor that handles the company’s transactions will discontinue their contract with them, but only after a $15,000 charge. This occurrence can put a company out of business.

What This Means to a Consumer

While some companies may deserve the consequences of a chargeback, most don’t. If a consumer is unhappy with his or her purchase, the buyer should speak to the merchant before making a call to the credit card company.

A lot of consumers see the chargeback as a quick and easy solution to their problem.  In reality, the chargeback process is quite lengthy – a cardholder’s money can be in limbo for six months.  Not only does the consumer suffer in the chargeback process, the merchant is dealt a hefty blow too.

Is a chargeback really worth the resulting headache for everyone involved?!

Guest author Kevin Oborney works for Chargebacks911.  He provides chargeback education to both merchants and consumers.  His ultimate goal is to reduce chargeback fraud (learn more about it here) and help every save time and money.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.

Recent Posts

Business2 days ago

Why Is Quantity Surveying Essential in Construction Industry

Quantity surveying is an essential part of the Australian construction industry. It is the process of calculating and estimating the...

Home Improvement4 days ago

How to Maintain Upholstered Furniture

No matter if you have pets or kids, maintaining your upholstered furniture is quite a challenge. Even though vacuuming it...

Business1 week ago

How Do I Find a Good Bubble.io Developer?

Finding a good bubble developer to help build your app or digital product can seem challenging. How can you choose...

Home Improvement2 weeks ago

When is a right time for home repairs?

Summer is a popular time for a renovation around the globe. While it is true that bright days and warm...

Top Alteryx Competitors Top Alteryx Competitors
Tech3 weeks ago

Top 15 Alteryx Competitors

The world has seen a tremendous rise in startups and new incorporations in the business world. Companies have great potential...

Lifestyle1 month ago

Latest Wedding Trends for 2023

If you’re planning on getting married this year, chances are you’re probably overwhelmed and confused when it comes to wedding...

Lifestyle1 month ago

Tips To Make The Most Of Your City Break In London!

London is one of the best cities in the world, known for its quintessentially British culture, great nightlife, fantastic museums...

General1 month ago

The Ultimate Guide To Packing For A Trip To London

London is one of the best cities in the world, known for it’s rich history, quintessentially British culture, the best...

Tech2 months ago

Top 15 Web Development IDEs

The web development field has seen sustainable growth throughout the years. As technology is advancing, so is the web development...

devops devops
Tech2 months ago

12 Key DevOps Programming Languages to Still Popular in 2022

“DevOps is not a goal, but a never-ending process of continual improvement.” – Jez Humble Delivering the finest of services...

Entertainment2 months ago

Festival Fashion Style Tips For 2022

Summer is well and truly here and with that comes the festival season! From the biggest stars performing on stage...

Green & Energy2 months ago

4 Tips For Making Your Wardrobe More Sustainable

Everyone is trying to make more of an effort to make their wardrobe more sustainable, but often are unsure where...

General3 months ago

7 tips on how to organize a budget-friendly move

If you are planning a move any time soon, you might be worried about all the expenses that wait for...

Metal Roof Colors Metal Roof Colors
Home Improvement3 months ago

Metal Roof Colors: How to Select the Best Color for a New Roof

Choosing the right type of material for your roof is enough of a hassle already that the question of choosing...

Health3 months ago

Simple Ways To Feel More Confident At The Gym

If you are new to the gym, or you haven’t been in a while, sometimes you might not feel completely...

Categories

Archives

Trending