The 2017 holiday season has been a record-breaking one, with retailers experiencing their biggest increase in sales since 2011. Yet January brings unwelcome news for many merchants, as large numbers of crucial Black Friday and Christmas sales end up as refunds and chargebacks.
This is a costly problem that most businesses can no longer afford to ignore. According to data published by Juniper Research, the global average cost of chargebacks each year amounts to approximately 0.47% of total merchant revenue.
Yet not all losses are attributable to fraud, as chargebacks are often triggered by customer confusion over seeing incomplete information on credit card billing statements. The problem is exacerbated by customers often requesting a refund directly from their card issuer, bypassing merchants altogether. Research by the analyst firm Aite Groupindicates that this process is often abused, with serious consequences for retailers’ bottom line.
There are solutions, however, that can significantly mitigate that problem, such as including the issuer in the dispute process early on. Here at Verifi, we found that by arming issuers with robust merchant data to prove both customer identity and intent of sale, we can effectively prevent the loss of millions’ worth of sales. Improving the customer experience while avoiding unnecessary losses for issuers and merchants is certainly our New Year’s resolution.