Friendly fraud is now reportedly the number one fraud attack source that merchants deal with, and eCommerce losses resulting from criminal fraud were as high as $20 billion dollars globally in 2021. Although chargebacks are a time-consuming distraction, treating them as an unavoidable business expense is a costly mistake. The good news is, it’s easy to reduce chargeback volumes and fees with the power of Payment Orchestration.
According to The 2022 Chargeback Field Report, merchants lose an average of $3.75 for every $1 lost to chargebacks, and the average cost of a single chargeback will reach $190 in 2023.
As well as the lost revenue in sales and cost of merchandise, this cost includes additional expenses such as chargeback fees, administrative fees and the overhead costs of shipping and fulfilment. Add the cost of false declines and return fraud, and you’re looking at a significant hit to your bottom line.
So why do so many merchants write off chargeback losses as an unavoidable part of running a retail business?
Partly because the payment dispute process can be difficult to understand, partly because the average merchant only wins 21% of the chargebacks they dispute, and partly because detecting fraud is incredibly difficult.
But with a combination of Payment Orchestration and dedicated chargeback solutions, merchants can effectively manage and reduce chargebacks.
