A new study published by Chargebacks911 and the Strawhacker group provides a sobering look at the scale of the problem, while Monica Eaton, CEO and Founder of Chargebacks911, dives deeper into the pressing matter of chargebacks in a new feature for The Paypers.
The Paypers is a Netherlands-based leading independent source of news and analysis products for the global fintech, payments, and eCommerce industry. The company’s products are aimed at merchants, payment services providers, processors, financial institutions, fintech companies, and technology vendors. Their focus is on major global trends and developments in digital channels, digital transactions, digital identity, and securing transactions.
Looking at the data from the survey, it can be determined that cardholders in the US disputed $65.2 billion in payment card charges last year. Then, when we apply the LexisNexis Fraud Multiplier, we can extrapolate that the true cost of chargebacks is somewhere in the neighborhood of $243 billion annually. It’s a shocking figure, but as Monica suggests, there is hope.
“Banks and card networks need to collaborate with each other and merchants to develop unified standards that are fair and balanced, properly enforce chargeback and dispute rules and guidelines, and hold stakeholders (whether buyer, seller, network, or institution) accountable in instances of chargeback fraud and misuse,” Monica says in the piece. “With the short-sighted implementation of revolving policies and quick-fix methods (to help reduce liabilities) — many of which place priority on customer service for cardholders rather than defending honest transactions — results backfire to create a flywheel effect that unintentionally rewards bad behaviors and perpetuates growth of the very problem we want to resolve.”
