Chargebacks come in various forms. But one of our earliest work has shown most chargebacks being initiated by fraud and authorization reason codes. It doesn't stop there since there are other factors to consider how a chargeback occurs. For instance, did you know American Express and Discover transactions were 85% more likely to initiate a cancel-related chargeback among U.S. restauranteurs? What about the fact that grocery merchants had faced chargebacks that were 53.36% more valuable (i.e., more expensive) from card-present (CP) transactions? That's just from the Visa and MasterCard card networks. It's all about knowing the little things in order to effectively manage chargebacks in your industry. That’s why we’re here to help.
Chargeback is proud to offer our latest white paper, Industry Dispute Ratios. This white papers gives you a better understanding of the chargeback landscape in not one, not two, but five U.S. industries. This is dedicated to inform department retailers, restauranteurs, grocers, petroleum merchants and travel merchants on what chargebacks cause the most severe impact—and which ones are 'all bark but no bite.'
What Can I Expect From This Free White Paper?
I think a better question is what can you not expect from this free white paper? Let's start with the source. One of experts aggregated data from the Federal Reserve Bank of Kansas City. Then we had a couple other people tailor the white paper to focus on:
- How significant is the type of transaction (e.g., CP vs. eCommerce) to a given reason code category?
- What type of chargeback poses the most risk to a merchant's bottom line?
- What other metrics can we provide from this data? Some examples include chargeback ratios, merchant loss rates and some good ol' fashioned average chargeback values.
- Bonus Content: What are the trends in sales within each industry?
This white paper also gives a comparison between chargeback metrics from four-party card schemes and three-party card schemes. For this moment on, we'll simply address the four-party scheme as Visa and MasterCard and the three-party scheme as American Express and Discover. Now then, here's a teaser of what the Industry Dispute Ratios has to offer:
The results showed fraud-related chargebacks to be the most common reason code category that all merchants experienced. And CP transactions developed higher chargeback and merchant loss values from Visa and MasterCard. American Express and Discover predominantly developed higher values from card-not-present (CNP) and eCommerce transactions. But the reason code category appeared to have the deciding factor on whether revenue loss from a chargeback was either possible or inevitable.
For example, the merchant loss rates from the travel industry would show inevitable revenue loss from Visa and MasterCard transactions affiliated to fraud- (4.02), quality- (1.92) and authorization-related chargebacks (3.16). The chargeback rates from the department industry showed possible revenue loss from fraud- (0.39), cancel- (0.09) and no receipt information-related chargebacks (0.08). But if a chargeback slipped through the cracks, revenue loss was more inevitable.