There’s still a lot of uncertainty surrounding the impact of Covid-19 on the global market. Regardless, the future’s looking bright for eCommerce merchants.

According to Statista, global eCommerce is expected to rise by 13.2% in 2022. By year’s end, online sales could top out at around $USD 753 billion.

More sales are wonderful news for merchants everywhere, right? Well, it may be more complicated than that.

It’s true that no business thrives without growth. There is, however, a note of caution concealed behind rising profits that cannot be reasonably ignored: increased instances of fraud and chargebacks.

Chargebacks are Easier Than Ever

As the public leans into the convenience of digital commerce, the occasions and opportunities for fraud expand at pace. With a 13% increase in online transactions forthcoming, more traffic will invariably attract criminals looking to exploit those numbers. Additionally, as app developers and startups work to streamline the eCommerce game, the ease with which cardholders can dispute transactions is likely to cause further problems.

Friendly fraud will account for 60% of all chargebacks issued annually by 2023. The credit card dispute process used to involve many steps that could dissuade the casual fraudster from attempting a dishonest transaction reversal. In today’s market, however, cardholders need only make a quick call to their issuing bank or tap a few comments into a banking app to initiate a chargeback.

This is not to say that consumers shouldn’t have the right to contest fraudulent or incorrect transactions. However, it does hint that perhaps the increasing simplicity of the process is ultimately counterproductive to effective commerce. Revenue fluctuations due to returns and chargebacks complicate every aspect of eCommerce, and further frustrate supply chain woes.

No matter which perspective we view the issue from, the number of chargebacks will spike with increased sales.

Chargeback Prevention & Management are Key

Banks and merchants are encouraged to consider every option available to respond to increased chargebacks and mitigate lost revenue. Investing in this problem now may limit greater losses down the road.

Effective chargeback prevention and management strategies can vastly decrease the cost and frequency of chargebacks merchants receive. Some of these include:

1. Providing An Outstanding Customer Experience

This isn’t restricted to one-on-one interaction with customers. Providing clear, open communication at every stage in the buyer’s journey— from initial browsing to their post-purchase experience— is an excellent means of remaining ahead of most problems before they arise. Many disputes can swiftly be resolved with a bit of forethought and pre-planning.

2. Rejecting Hidden Fees and Murky Policies

Few things will lead a cardholder to the chargeback process faster than a bevy of surprise fees or confusing policies.

Consumers are not easily led to purchases by mis-matched promises from merchants. Rather, they want to know exactly what they are buying, what it costs, and how fast they can expect it. They do not want hidden back-charges, excessive ‘handling’ fees added to their shipping costs, or unclear return policies. Merchants should be as clear as possible about policies and practices.

3. Maintain the Brand

Another common gap in merchants’ chargeback armor could be a result of faulty billing descriptors and a lack of effective or recognizable branding.

If a cardholder doesn’t immediately recognize the merchant’s branding on their statement, they may suspect the transaction is fraudulent and request a chargeback. Acquirers and processors should work with merchants about optimizing billing descriptors, or even providing dynamic descriptors when available.

4. Abide by the Rules

No merchant or financial institution should ever take payment card industry (PCI) compliance standards lightly. There should be no attempt to work around or ignore these standards.

Credit card processing rules that aren’t followed to the letter will boost liability for chargebacks and fraud. Thus, it’s important to conduct regular internal compliance audits, ensuring that all facets of data management are consistent with the latest standards.

5. Implement the Right Systems

There are many ways to achieve effective chargeback detection and management, from built-in CRM software solutions to a chargeback management company. Options include:

• Machine Automation: Automated management software that prioritizes and arranges tasks automatically, according to a set criteria
• Fraud Detection Software: When combined with machine learning and fraud scoring tools, fraud detection can provide a solid defensive shield.
• Blacklisting: Identifying and disarming bad actors before they can reoffend is an effective way to defend against repeat attacks.
• Chargeback Notifications: We can’t overstate the value of getting these time-sensitive notifications delivered through an internal notification system in a merchant’s CRM or chargeback management platform.
• Chargeback Management: Chargeback analysis can aid in diagnostic and prevention efforts, and lead to an overall improvement in merchants’ chargeback ratios and ROI.

Chargeback Management Works

We’re aware that this list can be daunting at first glance. For many businesses, implementing any one of these strategies alone or in short combinations might be costly and ineffective…at least at first. However, it’s something that merchants can’t afford to overlook.

Taken together, they can provide a formidable barrier between merchants and financial institutions and the chargeback problem growing just outside your window. Given the rate of eCommerce growth projected for the next year, it has never been more important to prioritize chargeback management and strategy.