Global e-commerce sales bring in approximately $931,490 every 30 seconds through computer sales and $269,683 through mobile purchases. Despite the wild success of e-commerce, there are dangers out there on the world wide web. One of the scariest for merchants is chargebacks, which can occur for a variety of reasons.
If you're wondering how you can get chargeback protection for your business, you first need to understand why it happens. Here's a list of situations that frequently cause chargebacks.
Before you panic, know that merchant fraud isn't always the fault of the business owner. One of the most common examples of this is when a waiter or waitress applies a much larger tip to a credit card bill than what was written down. In other instances, the failure to provide a customer with the services they paid for can result in chargeback. This is especially common for those merchants who focus on card not present transactions.
Credit Card Fraud
This is one of the most common reasons that chargebacks occur. When a cyber criminal steals credit card information, they may use it to purchase goods from your business. If a consumer discovers unauthorized credit card activity as a result, then chargeback is inevitable. The best way to prevent this is to have a secure payment system in place that's designed to prevent these fraudulent charges in the first place.
If you've done your part to ensure chargeback protection and there isn't any evidence of third-party tampering, then the reason for a chargeback could actually be intentional friendly fraud. If a customer lies about not having received products that they ordered, then it's possible for a chargeback to occur. In addition, a customer who wants to keep the products they received and get their money back could claim that the purchase wasn't authorized. By faking credit card fraud, they're actually committing real credit card fraud in a different way.
Chargebacks are harmful to customers and to your business. Now that you understand the common causes, you can more easily prepare for the worst should this situation ever occur for your business.