Chargeback Analysis

Chargeback Analysis
Josh Phelps
February 08, 2023

A chargeback analysis helps you understand the top reasons you have chargebacks. This analysis takes place by looking at the causes for consistent insufficiencies or issues in your payment process.

There are many ways chargebacks occur. For example, you may have a slow order fulfillment process which leads to delayed delivery of products. Alternatively your industry may be susceptible to fraud. Whatever the case, there are a few major reasons that we’ll look into now.

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Continuity Billing Chargeback Analysis

Continuity billing is when a customer gets charged on a recurring basis. They receive a bill every week, month, or year, and sometimes don’t approve of the charge. Many continuity billing services are done through automatic opt-ins at the checkout page. Some customers may not even be aware they are getting charged until they see their credit statement.

As a result they may file for a chargeback with their issuing bank . The chargeback becomes a formal dispute with the bank as the judicator. In a chargeback analysis, you learn what types of customers are more likely to file for chargebacks in this way.

Refund Policy

If your customers ask for a refund for the items they purchased and you don’t send them one, they may take the matter into their own hands. As such, unhappy customers or demands for refunds happen in a number of ways. The refund request may be due to a faulty product, order speed, or friendly fraud.

In any case, taking a look at your purchasing funnel and order fulfillment puts you in a good place to better understand weak points. Something as simple as a response email with tracking information can lead to higher rates of satisfaction and lower refund requests .

Friendly Fraud

Chargebacks from friendly fraud can cause a significant decline in profits, and harm your merchant account standing. Friendly fraud is when a seemingly standard customer decides to ask for a refund or file a chargeback for an unwarranted reason. Their goal is to keep the product and money they paid for it. The more susceptible your company is to fraud, the more likely you’ll see increased chargeback rates for this reason.

Order Speed

As mentioned above, order speed is a main issue when it comes to chargeback requests . With Amazon’s one day shipping policy, many ecommerce stores struggle to hit that difficult mark. Moreover, if an item is on backorder or shipped internationally, it may take months for it to arrive at the doorstep of the buyer. Be forthright about shipping times and plan to make orders you can fulfill rather than selling items that are sold out or not available.

International Sales

If you sell internationally there is a higher likelihood scammers will try to take advantage of your ordering process. They may order large quantities of goods with false payment data then attempt to receive the shipment. Be wary of orders that seem out of the ordinary as this may be an early sign of fraud.

Chargeback Tools

All of the above chargeback issues can be analyzed and resolved by reputable companies. They have technology, automations, and early detection tools to make sure your account doesn’t get dinged as high risk or canceled due to high chargeback percentages.

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Josh Phelps is an experienced sales professional with eight years of expertise, including four years in payment processing. Throughout his career, Josh has successfully secured approvals for thousands of businesses, demonstrating his skill in navigating and optimizing the payment processing landscape.

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