From finding investors to taking on several roles, you can find success at many levels of a start-up. But with success come challenges that inconvenience business owners. More specifically, chargebacks can pose a significant threat to business revenue since they involve returning money to a customer’s debit or credit card after they submit a dispute.
While most disputes are legitimate, other refunds allow fraudsters to obtain free merchandise. Any business can fall victim to fraud, but some companies are more vulnerable.
4 factors that influence chargeback frequency
The type of merchandise offered can affect the number of chargebacks you would contend with. For example, industries offering speciality products and services, airline tickets, telemarketing, and cryptocurrency are infamous for having high chargeback ratios.
Many of these businesses may sell items close to illegal, employ questionable marketing, or operate offshore.
2. Business Model
Having a niche may require a specific business model. For instance, a subscription-based service offering specific goods of high-dollar amounts may also see an increased risk of chargebacks. Currently, mobile apps are seeing increased fraudulent activity, placing their companies at higher risk.
Chargeback volume may also increase given a business’s location. To elaborate, conducting business operations outside of significant trade hubs such as the US, UK, Canada, and Japan may affect the clientele you attract. Many of these locations require currency exchanges that can place you at a higher risk for chargebacks.
4. Size and Experience
Small businesses may deal with more retail chargebacks than more prominent industries, given their experience. Many start-up owners are not well versed in spotting fraudulent or suspicious activity at first, so they don’t know what to look for.
While there are factors that can influence chargeback frequency, having a business that may fit the profile doesn’t mean prevention is inevitable. When you know what to look for and work with a payment processing company that matches your business needs, you can minimize chargebacks and avoid its additional inconveniences.
Author: Libre Writer
Libre is a guest writer account under Newslibre sharing content from all over the globe while providing informative content on different topics.