Chargebacks are among the most frustrating aspects of accepting online payments for your business, particularly e-commerce. Even though you can always get a reverse when you file a complaint, you are still vulnerable to chargeback abuse because you are charged for the transaction dispute, which can financially cost your business.
While chargebacks are unavoidable in the online payment industry because they serve as consumer protection against fraud, it is critical that you understand why you suffer from chargebacks, how it costs your business and profits, and how you can drastically reduce or permanently eliminate their occurrence.
However, before delving into how you can solve the chargeback problem in your e-commerce business, let's first understand chargebacks, how they occur, and their impact on your conversion. So, in this article, we'll go over everything you need to know about chargebacks, how they affect your online business, and how to prevent them in the future. As a bonus, we will reveal a payment tool that every online business, particularly e-commerce, uses to process and manage their online payment challenges.
Let's get started!
What are Chargebacks?
Chargebacks occur when a customer questions an online payment transaction and requests a reversal from the card-issuing bank. Chargebacks, also known as payment disputes, appear to act as a safeguard against fraud and fraudsters for a customer.
On the other hand, as a merchant or online business owner, chargebacks can seriously threaten your revenue and business sustainability. In other words, you are on the receiving end of every chargeback because you cannot inspect the payment process before the transaction is completed, resulting in a deduction and a chargeback processing fee.
How Chargebacks Occur?
There are usually three parties in a chargeback process: the customer, the processing bank, and the online business or merchant. So, when dealing with chargebacks, the customer, processing bank, and merchant follow a specific procedure.
Firstly, the customer makes a purchase through an online payment method, with the processing bank charging the customer's account using their card payment information and crediting the merchant's account.
However, the customer may issue a chargeback for any reason, including failure to receive the purchased item, error on the part of the customer or merchant, customer changing their mind and returning products or canceling transactions, or miscommunication and a lack of clarity between the customer and the e-commerce merchant.
So, after the customer files a complaint, the processing bank starts the chargeback procedure. Following the chargeback process by the processing bank, the e-commerce merchant must provide transaction details to justify the approved transaction. However, the bank usually provides information about the reason for the chargeback, with the e-commerce merchant having a timeframe to respond and justify the chargeback.
Following the merchant's responses and the processing bank review, a chargeback will be issued regardless of the outcome, with the processing bank responding to the customer with a decision that will most likely rule in the customer's favor.
How Do Chargebacks Cost E-commerce Merchants
Unfortunately, chargebacks are commonly unfair to e-commerce merchants because some charges are incurred regardless of the outcome of the dispute. Among these charges are:
Processing Fees: When a chargeback is requested, the payment processor charges the merchant regardless of whether the merchant is at fault.
Acquiring Bank Fees: There is usually a chargeback fee, which ranges from $20 to $100 and covers the costs incurred by the acquiring bank during the process. The merchant does not receive the fee regardless of the outcome of the dispute.
Aside from the charges incurred by merchants, a high chargeback rate increases the overall operational expenses of the e-commerce business, resulting in a loss of customer and payment gateway relationships.
How To Solve Chargebacks Problem With Cryptocurrency
Chargebacks are unavoidable with card payments on e-commerce sites, and they significantly impact revenue and survivability. Accepting cryptocurrency payments, on the other hand, can eliminate chargebacks on your e-commerce business.
Accepting cryptocurrency payments eliminates chargebacks because transactions made with cryptocurrencies are exempt from chargebacks since they're processed by a crypto payment gateway that cannot reverse a transaction once it has been made. In other words, chargebacks will no longer exist once you begin accepting cryptocurrency payments because cryptocurrency transactions are irreversible.
Apart from permanently removing chargebacks, accepting cryptocurrency payments lets you stay ahead of the competition by providing customers with a smooth payment process. Other reasons to accept cryptocurrency payments include cross-border payments, low transaction fees, and a fast, instant, and secure payment method.
Thus, chargebacks are permanently eliminated when you use a cryptocurrency payment gateway, which allows you to receive payments without the use of intermediaries acting as processors. Crypto payment gateways help eliminate chargebacks permanently and provide anonymity to customers, lowering the risk of fraud and other security concerns.
How to Use a Crypto Payment Gateway to Fix Chargeback Problems
Accepting cryptocurrency payments is undoubtedly one way to permanently solve the chargeback problem and provide customers with a seamless payment experience. As a result, using a cryptocurrency payment gateway allows you to automate the payment process and accept cryptocurrency payments.
Solving chargeback problems with cryptocurrency and accepting cryptocurrency payments is simpler than you might think; you only need to integrate a crypto payment gateway API and start receiving payments without restriction or fear of chargebacks. Hence, one of the best crypto payment gateways to start receiving payments without restriction or fear of chargebacks is CCPayment.
Solve Your Chargebacks Problem With CCPayment
CCPayment is a new payment processor that aims to make cryptocurrency payments as simple as possible in online stores. It aims to address a wide range of market concerns by allowing merchant payments with almost no fees and a diverse range of supported cryptocurrencies.
CCPayment simplifies the integration of cryptocurrency payment gateways into websites and stands out with a service charge of 0.03%, which is 0.97% lower than the industry average. It supports transactions with over 70 wallet service providers, including well-known ones such as Cwallet, Coinbase, MetaMask, Trust Wallet, and others.
CCPayment protects customer data with advanced data encryption and uses adaptive transactions to conceal the path of customers' spending. CCPayment has been through several security audits and is thus risk-free.
Visit the CCPayment website, create an account, and import the API into your website in seconds without writing a single line of code to solve chargeback issues and gain business stability.
Why Choose CCPayment?
CCPayment outperforms the general market in the following ways in terms of efficiency:
- Airtight security
- Incredibly low fees
- A wide range of cryptocurrencies supported
- Free merchant-to-merchant transfers and withdrawals to Cwallet.
- Compatible with well-known wallet service providers such as Metamask, Coinbase, Cwallet, Trust Wallet, Exodus Wallet, and others.
CCPayment, a subsidiary of Cwallet, aspires to be a global leader in the crypto payment industry by providing solutions that assist businesses in advancing to the next level of the global financial revolution through cryptocurrency.
With CCPayment compatible with over 70 wallet service providers, you don't have to worry about which wallet your customers use; all you have to do is customize your merchant profile and payment settings to your liking, and you're ready to go!
Get started with CCPayment today! Learn More.