What Are Your Top 5 Chargeback Challenges?
eCommerce spending is projected to reach $5 trillion by 2020, which could generate around $80 billion in chargebacks. That’s a lot of chargebacks to deal with!
We asked merchants participating in “The State of Chargebacks: 2018 Report" to identify their three biggest challenges with respect to chargeback management. More than 1,000 respondents helped to produce this list of top 5 chargeback challenges:
- Disputing Chargebacks
- Identifying Friendly Fraud
- Decreasing My Chargeback Rate
- Balancing Chargebacks and False Positives
- Cost of Chargebacks
When it comes to the number one challenge—disputing chargebacks—online businesses tell us that their biggest struggles involve a) low win rates and b) the operational burden of disputing chargebacks. “The State of Chargebacks: 2018 Report" explores this challenge further and reveals some interesting findings. For example:
- About 1 in 4 merchants dispute 1-15% of chargebacks
- About 1 in 6 dispute 15-30% of chargebacks
- About 1 in 10 dispute 30-45% of chargebacks
- About 2 in 5 dispute more than 60% of chargebacks
What’s more, only about 1 in 3 merchants win more than 45% of their disputes!
As for the second biggest challenge—identifying friendly fraud—28% of online businesses say that friendly fraud is their main source of chargebacks. Further, they report that a) handling dishonest customers and b) dealing with a payment chargeback system that can often favor cardholders over merchants are their key difficulties. Interestingly, while 48% of merchants cite card-not-present (CNP) fraud as the leading cause of their chargebacks, it doesn’t register as a top 5 challenge when it comes to chargeback management.
Somewhat surprisingly, too, the cost of chargebacks was a fifth-place finisher. However, different size online businesses rank this challenge differently. While nearly half of smaller merchants (less than $10 million in annual revenue) name the cost of chargebacks as a top 3 challenge, only 1 in 3 larger merchants ($100 million or more in annual revenue) say that.
In fact, the study indicates that the higher the revenue of the online business, the more likely that business is to be concerned with the finer nuances of chargeback management. For example, more than 50 percent of larger organizations ($100 million or more in annual revenue) consider balancing chargeback prevention against false positive reduction as a top challenge. On the other hand, just 32 percent of smaller merchants (less than $10 million in annual revenue) find this to be a top 3 challenge.
As you might imagine, although only about 1 in 10 merchants report that they are in an excessive chargeback program, getting out of it is a top priority for them.
What are your top chargeback challenges? Do they align with what other online merchants are reporting? Download “The State of Chargebacks: 2018 Report" to find 30 charts, tables and graphs visualizing the state of chargebacks, plus read insightful analysis to help you optimize your chargeback practices.