Risky business: Why some retailers are struggling with chargebacks

Chargebacks are fast becoming a huge burden for small business owners, especially for those that have a time delay between the payment and the delivery of the product itself.

That includes small businesses like independent travel agents that typically collect deposits and other fees months before the customer actually travels, furniture makers that need to charge something up front for materials for long-term projects, and others.

Chargebacks in retail are exceptionally disruptive for these types of ventures and their long-term growth ambitions. It can be even worse when a payment processor labels companies like these as high-risk, suspends them and develops difficult relationships between themselves and the businesses they work with.

A lot of small business owners concentrating on building their business often accept retail chargebacks as a necessary evil in the professional world. It doesn’t have to be that way though, and partnering with the right payment service provider can help them to better navigate the processes and pitfalls chargebacks bring.

A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read ‘What is friendly fraud and how do chargebacks work?’ to learn more.

The true impact chargebacks in retail has on small businesses

Research from JP Morgan Chase shows the incredible impact chargebacks have on the retail community.

Their research revealed that 2015 saw 7% transaction growth across the UK, representing approximately £126 billion in retail sales. Good news; at the same time though, chargebacks increased by 20%.

According to the Aité Group, that equates to a loss of over £30 billion for retail industries over 2015. A huge amount by any means, but especially tough for small business owners working on tight budgets.

With UK online retail sales growing 13.2% in March 2017 alone, equating to more than £10 billion being spent online, the potential to be hit with a chargeback request grows with each and every retail sale.

Partnering with the right payment services provider who can refine and optimise your internal financial and retail processes though, can go a long way to reducing the frequency of chargeback requests, build stronger relationships with your customers and make sure a chargeback isn’t something likely to cripple you.

Better manage retail chargebacks with the right payment provider

That can be especially convenient for so-called high-risk small business owners determined to grow their business and embrace the new payment services which are changing the high-street and evolving the way we do business online.

Different payment providers and services have different chargeback processes, and the more your business opens itself up to the right ones most in-tune with the ways your customers shop the easier it will be to understand and navigate the chargeback process.

Making changes to key areas too, such as your fraud prevention and resolution processes, your returns policies, building better relationships with banks, improving your communication channels with your customers and many more factors are just some of the areas to look at when it comes to dealing with a chargeback and keeping your customers on-side during a financial dispute.

Fibonatix is a specialist payment services provider, passionate about working alongside small businesses to help them grow and better navigate financial and complex compliance legislation when it comes to chargebacks and other issues.

Share