We all know chargebacks are a complicated and costly problem…
- The chargeback process is broken
- The large majority of cardholders will bypass the merchant and call their bank first when questioning a charge on their bill
- The banks have limited information at their fingertips to validate the sale
- This greatly increases the risk of chargebacks
Without the purchase details needed to legitimize the transaction, issuers cannot easily discern first-party/“friendly” fraud from true fraud. Additionally, some cardholders have learned how to “game the system” and defraud merchants of their hard-earned sales and profits, leaving the issuers typically with one option – file a chargeback.