The other way round to frame the same question is how chargeback alerts keep your merchant account stable and functional for longer time? Chargeback is very crucial in determining the stability of your high risk merchant account. The reason that web development and SEO companies are kept under high risk industry segment is the number of high chargebacks filed by the customers against these companies. As per the business ethics and various governmental rules and regulations, any dispute or complaint from a customer i.e. a chargeback must be honored by the merchant account provider or acquiring bank or payment processing company.
If we dig deeper into this topic, the most basic question is what is a chargeback? When a customer avails any services or receives products from a merchant that isn’t satisfactory or is damaged or is not what the customer sought; the customer files a chargeback dispute with the payment processing company or the customer’s affiliated bank. An inquiry is raised against the merchant from the customers end to satisfy the issue. In case the merchant fails to resolve the issue, a chargeback is initiated and the amount charged for that particular service or product is returned to the customer. Now this issue is more risky in case of a high risk merchant account because the intensity and amount of chargeback are also a lot higher.
At times, it can be a chargeback fraud but the final outcome is completely dependent on the inquiry done the payment processor, card brand, card issuer or the card issuing bank. There is always a provision of variable chargeback fee whenever a chargeback is initiated against the merchant. This adds to the negative impact of the merchant account.
For high risk merchant accounts, the industry standard of maximum chargeback ratio is less than 2%. If the chargeback ratio exceeds this limit, there are severe consequences on the respective merchant account. It may also lead to cease, block or closure of the merchant account eventually. If we have to calculate chargeback ratio for a merchant account, it equals to the percentage of total number of chargeback in a month divided by the total number of transaction in that month.
Lastly, if a merchant wants to maintain the high risk merchant account for web development and SEO company for longer time then they should avoid chargebacks. At times, many of the service providers do provide a time frame of 24 hours to resolve the chargeback issue. Thus, the merchant should ensure the best quality services to their customers and in case of any dispute they should promptly respond to the customer with best possible solution including the clause of complete refund.
Quadrapay.com advises the merchants working in web development and SEO industry to maintain a strong customer relationship and provide best-in-class services with provisions of complete/partial refunds in case of dissatisfaction of customers to avoid chargebacks. Whether it is a pre-sale or post-sale issue, the merchant should adeptly respond. Merchants should also try to have higher number of transactions in the merchant account. This will further reduce the chargeback ratio.