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Eliminating the Holiday Hangover

posted on: Wed Jan 23 2013

Site visits are up, customers are buying and sales are surging. While the holidays bring much needed cheer to the online retailer’s revenues, there is always a nagging concern about what today’s sale could bring two months from now…

While online sales volume increases dramatically during the silly season, pegged at a 14% clip this year alone by comScore, fraud follows opportunity. This means fraud increases in line with volume, and the product you sold today could be haunting you as a chargeback in the months ahead.

This is what we call the holiday hangover. Whether it is a stolen credit card, or a case of friendly fraud when junior got a hold of dad’s credit card, the result is the same. The chargeback.

Chargebacks impact an online merchant in several ways, including:

  • Loss of product or service
  • Fine/penalty applied by bank or payment processor
  • Elevated fines and enrollment in excessive chargeback program if merchants exceed chargeback limits
  • Complete loss of online payment options

Did the last two get your attention? Chargebacks can be crippling for a business when they reach a certain threshold. According to the Merchant Risk Council (MRC) the current acceptable rate for chargebacks is 1% or less, generally speaking. It could vary in certain verticals and internationally, but if you are over 1%, you need help. While retailers will have to deal with some level of fraud, once that level exceeds that threshold, card brands like Visa and MasterCard will dish out fines. If chargebacks continue to exceed this rate for a prolonged period, fines increase as does the threat of losing that payment option altogether.

Compounding the problem is the time it takes simply to process a chargeback. It could take a month for the customer to receive a credit card bill and see the charge, followed by the process of submitting a fraud claim. Then the payment processor or bank assesses that charge against the merchant with a fine. Even with rock solid proof that the charge was legitimate, it can take months for the merchant to be made whole again.

At Kount, we understand the holiday hangover and the very real threat that chargebacks pose to your business. You can read a Retail Solutions Online profile about how we dropped CD Baby’s chargeback rate from 2.5% to 0.07% or how implementing Kount Complete has seriously reduced the time spent manually reviewing questionable orders.

Or you can hear more about Kount Complete for yourself. On January 31 we are hosting an aptly titled webinar: Get Out of Chargeback Hell. We are also offering a program where we commit to reducing your chargeback rate to under 1% in 60 days. If we can't reduce your chargebacks to under 1% in less than 60 days, you won’t pay a dime.

We know the holidays were good, but wouldn’t you feel even better without the holiday hangover? We have just the cure.