Australia’s eCommerce Merchants Want Help as They Battle Chargebacks

Chargebacks are a fact of life in commerce.

Customers dispute transactions, money is kept back from merchants amid the dispute, and the card issuer determines whether the money should be kept by the merchant or returned to the cardholder.

But for merchants, and specifically eCommerce firms, the specter of increased chargebacks hits the top and bottom lines and limits visibility into operational cash flow. There are also the problems of damaged customer relationships and fees incurred in tandem with chargebacks. A high occurrence of chargebacks can spur payment processors to levy fines or penalties.

PYMNTS Intelligence’s “Online Merchant Checkout Innovation Report” focused on Australia found that eCommerce firms in the country want their payment service providers (PSPs) to help blunt the impact of chargebacks.

For middle-market eCommerce businesses — where revenues top out at about $1 billion — widespread improvements are being seen with checkout, as a relatively small percentage of merchants compared to other countries said they face challenges in that area.

Limiting chargebacks was a key driver for 44% of merchants, which indicated that there is a real and lasting concern that the appeal of card-not-present transactions (that are easier for consumers) and the volume of those transactions must be balanced against the risks of chargebacks and disputes. Focusing on higher conversions addresses one of the most immediate business goals — ensuring more shoppers finalize their purchases — but it can open the door to chargebacks after the purchase is completed.

The problem is especially acute when the chargebacks are tied to fraud, as customers set disputes in motion for legitimate commerce, as products have been received, but the cardholder says they haven’t. In other cases, customers may be fraudsters in disguise. Fraud can damage the financial standing of companies and carry reputational risk, which has a negative ripple effect, deterring new customers from doing business with an eCommerce firm that they think may not be protecting their data adequately (and criminals use that data to get cards and ply their scams).

The use of automated chargeback solutions and services tied to PSPs can solve some of those pain points. However, only 18% of Australia’s merchants receive automatic updates from their PSPs, which would include those chargeback and dispute resolution tools, and thus most firms must request those updates.

The report found that 82% of merchants in Australia said they can request new technology from their PSPs, which indicated that there is wide availability of new features. However, since only about half of merchants have asked for new features from providers, half have not.

According to the report, 48% of merchants in Australia said their PSPs help them create an easy and convenient user experience, and the same share said they benefit from better approval rates. As many as 46% of firms cited lower rates from working with their chosen PSPs, so there is room for eCommerce firms to get more from their relationships in the drive to reduce chargebacks and minimize disputes — for the benefit of all stakeholders.

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