Questions about a merchant account.

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Hello everybody!
I am new to the Ecommerce industry and have a few questions about it.
1. Who among the Merchant Account Providers or Agents ISOs is lenient and tolerant towards the chargebacks (~10%).
2. Websites selling which types of products statistically are having the most and the least of the chargebacks? I'm not talking about high-risk products, of course, so no gambling, adult, supplements, payday loans etc. No, just regular type of products: books, home tools, sports equipment etc.
3. In terms of amount of chargebacks what is better to sell- services (like software development services, for example) or physical goods?

Thank you so much for your future replies!
#account #merchant #questions
  • Profile picture of the author LABEShops
    I believe electronics and cell phones have always had the highest instance of chargebacks - bigger ticket items are the biggest target of fraud in general.

    Your best bet is to try to eliminate chargebacks as much as you can instead of looking for a lenient provider (there is no such things - no matter the provider, if you get a lot of chargebacks, anyone will dump you.). Give great customer service, ship fast, provide great products, have fraud checks in place to not ship to them in the first place, etc.

    Even with precautions you are going to get one now and then. Handle it well and move on.
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    Owner of LABEShops.com & 20+ Niche Online Stores as well as Scifispace.com and other sites. Recommended Host: Evolve

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  • Profile picture of the author Oziboomer
    Originally Posted by matthewgray0282 View Post

    Hello everybody!
    I am new to the Ecommerce industry and have a few questions about it.
    1. Who among the Merchant Account Providers or Agents ISOs is lenient and tolerant towards the chargebacks (~10%).
    2. Websites selling which types of products statistically are having the most and the least of the chargebacks? I'm not talking about high-risk products, of course, so no gambling, adult, supplements, payday loans etc. No, just regular type of products: books, home tools, sports equipment etc.
    3. In terms of amount of chargebacks what is better to sell- services (like software development services, for example) or physical goods?

    Thank you so much for your future replies!
    My business has been selling online since the mid nineties and using a variety of merchant services over the years.

    If you are selling legitimate physical products to people who have to sign for delivery in countries that are not high risk then you should't have anything to worry about.

    Most chargebacks originate because - 1 - FRAUD or 2. Either the product didn't arrive or it did arrive and it was damaged...and the merchant didn't do anything about either ensuring delivery or providing after sales service.

    In over $4MM of online business I can only recall two chargebacks and they were two transactions in 1997 both to the same individual in Romainia.

    At the time I had done business transactions successfully into Bulgaria and although I had suspicion over the transactions the credit card processor assured me there was no issue.

    The chargebacks were about 4 months later when it came to light the credit cards had been cloned and the goods were stolen out of the delivery system and not physically delivered to the address..it was organised crime.

    Since then no chargebacks and we do a ton of online business.

    Occasionally we will get a call from a credit processor asking why we are processing a transaction for something...once we were processing payment for a Russian artist who was exhibiting in Australia and the credit processor wanted to know how we were processing the transaction when the credit card holder was in Dubai in airport transit lounge.

    It was the mother of the artist who was travelling on behind their son who was processing the transaction with us.

    They recommended we do a reversal and process the transaction again after the actual card holder arrived in Australia and get them to sign the merchant transaction and check their passport.

    At the time the signature was accepted above any PIN.

    The transaction was for around $14K so I can understand the concerns of the bank at the time.

    The payments cleared and there was never an issue.

    It became quite a joke between us and the client who was a well known artist exhibiting in one of our National galleries as an invited guest.

    Returns are a different thing.

    You need to have strict returns policies in place and also be responsive and empathetic to customers wanting to return goods.

    We have both "offline" processors and "online" processors.

    The rates vary between both to allow for the risk.

    With our offline processor we have a certain percentage we can also process online or via phone at the lower rates and although there has never been any issue they always have the option to "change the contract" if they think we are abusing the percentage.

    There will always be fraudulent transactions but most of the processors pick up on this often before you and they will block the transaction from processing.

    Some others you might have to exercise a bit of common sense with and that might be things like - size of order - country - delivery address - delivery options - etc.

    Best regards,

    Ozi
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