Chargebacks: A Fast-Growing Threat Facing the Restaurant Industry

Chargebacks911® COO Says BOPUS is Causing Chargebacks to Rise

In a new guest feature for Modern Restaurant Management, Monica Eaton-Cardone says the “buy online, pick up in store” sales model invites new challenges into the food and beverage space.

Modern Restaurant Management (MRM) magazine is a go-to resource for on-the-go restaurant-industry professionals. Focused on all aspects of restaurant management news —the business of eating— the online magazine posts news items on a daily basis. MRM incorporates profiles, trends and expert advice to offer valuable content to this niche.

The buy online, pick up in store model—commonly known as BOPUS—infuses elements of eCommerce into the brick-and-mortar space. As restaurants have increasingly incorporated BOPUS elements into their operations, the result has been a sharp increase in restaurant industry chargebacks.

“Back in 2013, the food and beverage industry had one of the lowest average chargeback rates of any business vertical,” Monica explains. “Fast-forward a few years, though, and the picture looks very different. According to the 2018 State of Chargebacks survey, 28% of respondents in the food and beverage industry reported having a chargeback rate between 0.5% and 1% of overall transactions.”

The solution to this growing problem is complex, requiring a comprehensive overhaul of outdated chargeback practices. In the meantime, merchants need to take it upon themselves to defend against chargebacks.

“Until we have that level of comprehensive transformation across card brands, you’re going to have to look out for yourself. This means identifying chargebacks based on their three fundamental sources: criminal fraud, friendly fraud, and merchant error.”