Let’s talk about how a chargeback mechanism works for a product or service, and which tools an entrepreneur can use for chargeback protection. Or how merchants can use a solution by Ethoca to avoid losing money with consumer fraud.
What is a chargeback?
Chargeback is a mechanism whereby the payment system cancels a transaction on the buyer’s bank card and forcibly returns money from the seller’s account.
However, to return the money, the buyer needs a serious reason – for example, they have not received the paid product or the money from the card has been charged twice by mistake. But often there are cases of fraud from customers for which there are chargeback protection solutions.
What the entrepreneur loses because of chargebacks
If the acquiring bank returns the money to the buyer, the entrepreneur not only loses the payment but also loses the acquiring commission.
It’s worth noting that payment systems impose fines on banks that serve stores with a high frequency of chargebacks. And, for example, in Europe for frequent chargebacks, banks can get a fine in EUR, USD, or the equivalent in another currency. This is done as part of an anti-fraud initiative. And often payment systems also have chargeback protection systems.
How to protect yourself from unwanted chargebacks
First and main, forming the right chargeback protection for online shops. This is one of the basic tips that Ethoca can give to its users to create some kind of chargeback protection, in addition to the solutions offered by the banks and payment systems
The chargeback protection system provided by the aforementioned company can be an additional security frontier. This system is built as a network where transactions are evaluated, and the online account of a fraudulent buyer is detected among them. Such transactions are blocked until the circumstances are clarified so that in the future the seller does not have to return the money and incur financial losses.
And you don’t need to do any complicated steps to implement such a chargeback protection system. To protect your eWallet you only need to have a Maxpay account that offers Ethoca services. This will help protect your transactions from fraudsters. This chargeback protection system is fully on top of Visa and MasterCard and gives you access to a transparent system with information about users and their transactions.