Why Are Chargebacks So Awful?
Chargebacks suck in more ways than one.
If you choose to do nothing after a chargeback has been issued, the credit card provider will demand money to be paid back to the customers, and you’ll have to pay it—that’s a refund but worse because you’ll lose the product and have to pay the chargeback fee (ex. iPasspay’s chargeback fee=$25). Additionally, your account will be marked with a chargeback. The higher your chargeback rating the more likely your payment processor will shut down your account and freeze your funds. Your business will be on life support at this point, unable to fulfill any payment transactions.
If you choose to fight the chargeback, it can be a time-consuming process as you are required to gather evidence that the customer’s purchase was legit and successful. This can be hard depending on your business’s organizational structure. If you haven’t implemented tracking numbers, required signatures upon delivery, or other substantial evidence, winning the dispute will be tough. Generally speaking, credit card providers and banks tend to side with the customers. Every chargeback is an uphill battle for merchants.