Chargeback protection is a strategy to protect e-commerce merchants from fraudulent claims. A number of payment service providers and marketplaces offer chargeback protection services.
What happens when a chargeback is issued?
Some of these chargeback management services help resolve customer complaints before a dispute occurs. Others defend disputes on the business’s behalf.
Many of these services also provide chargeback guarantees. If a chargeback occurs, the business will be reimbursed for the cost of the chargeback protection and the conditional refund.
Chargebacks are a common problem for e-commerce businesses. They can have a negative effect on the company’s reputation and can discourage customers from shopping again.
Choosing chargeback protection helps reduce the amount of time and money spent on resolving disputes. In addition, it can help eliminate financial uncertainty.
Before choosing a chargeback management strategy, a business should perform a root-cause analysis. This will enable the business to identify any errors that lead to disputes. Ultimately, the root cause analysis will help the company to take preventative measures.
It is important for businesses to consider their risk tolerance before deciding on a chargeback protection strategy. High-risk businesses may need a specialized high-risk merchant account.
Whether you choose to fight chargebacks yourself or use a third party, you’ll have to determine whether you want to pay for a full defense. Some services will even cover the costs of the dispute.
However, you should know that not all chargebacks are eligible for a chargeback guarantee. You’ll also need to ensure that your business has the ability to accept and process credit cards.
