Protecting yourself from chargebacks and saving your business!

[berrycorp]

i am in the process of launching my business venture and i have invested quite a lot in it and i wont be having any major margins in it...

now every tom dick and harry has been telling me to expect atleast a 5% chargebacks... and that is thinking that am users are nice guys and dont knw what chargebacks really are and love my product!

now i know that is not the case always... and i dont like the idea of having so many chargebacks! i need to pay commissions for the sales and as far as i know a charge back can be initiated for like 12months!

each charge back will cost me $20-30 extra as dispute fee by my payment gateway!

i CAN NOT hold the payment for something like 12 months!! it also costs me to run the service so i will loose something like $45-50 on a chargeback of $10 service... now that would be terrible and i would go bankrupt in no time! my margins are near 0!

anyways.... now i was looking at a solution and found this

http://echosign.com/

they look good but i will have thousands of sales daily... and its impossible to do this "i think" for so many transactions!

can anybody suggest me a solution to solve this problem...?

the major cause of worry to me is that the product i am selling is a digital product!

 

[crashed]

Chargebacks are a cost of business, and should be factored in

So if you sell your service at $10
expect 5 chargebacks every 100 sales
each chargeback costs $40

$40 * 5 = $200
Now for 100 sales you have $200 chargeback cost

We now spread that cost over the other 95 sales:
$200/95 = $2.10

So our final selling price is:
$12.10

 

[scott1995]

Just one thing, if you really are worried about fees, they normally don't happen, so if you just refund right away you won't have any fees to worry about (atleast with my expierence). Have you thought of just not using gaypal?

 

[berrycorp]

Chargebacks are a cost of business, and should be factored in

So if you sell your service at $10
expect 5 chargebacks every 100 sales
each chargeback costs $40

$40 * 5 = $200
Now for 100 sales you have $200 chargeback cost

We now spread that cost over the other 95 sales:
$200/95 = $2.10

So our final selling price is:
$12.10

that is something like the last resort.... innovation and cutting costs are something i love!

i am looking at ways i can cut costs for the end users! i am not doing business to make money for paypal etc! i want some innovate solution to reduce these costs to 0 so that my pricing is lowest! and the benefits can be passed on to the users!

Just one thing, if you really are worried about fees, they normally don't happen, so if you just refund right away you won't have any fees to worry about (atleast with my expierence). Have you thought of just not using gaypal?

i am not talking bout 10-20 transactions here... i am talking about 10k transactions a day!
and i dont use paypal.... i use professional payment gateways!

 

[gimme4free]

Just one thing, if you really are worried about fees, they normally don't happen, so if you just refund right away you won't have any fees to worry about (atleast with my expierence). Have you thought of just not using gaypal?

Not using paypal = throwing away 75% of your business if not more.

If someone doesn't accept paypal I usually wont shop there nowadays, they have become a monopoly for online processors, they rule over customers and merchants.

Unfortunately, in a merchants views it is in their interest to use Paypal for the amount of extra busienss that they will get, this will usually cover the costs of chargebacks.

I use E-Junkie which usually detects fraudulent payments before they actually come in so it will not allow them to click pay.

For my applications I only release trials until the chargeback period is over.

When accepting money online chargebacks can be done with pretty much any payment processor, including if you are accepting Visa paymanets, so really Paypal is not the problem, it is just most widely known for being the problem because so many people use it over other payment processors.

 

[crunch]

It's rare to get a chargback without first having the chance to solve the problem.

I would get at least 1 warning, i then would contact the customer and sort things out, if i refunded, there were no chargeback fees...

 

[berrycorp]

I use E-Junkie which usually detects fraudulent payments before they actually come in so it will not allow them to click pay.

For my applications I only release trials until the chargeback period is over.

i am using a pro solution too... but the thing is... these chargeback rates are normal with all the protection that these guys provide... the industry looks like a mess!

and chargeback period for credit cards is around a year! so thats a bummer!

 

[gimme4free]

It's rare to get a chargback without first having the chance to solve the problem.

I would get at least 1 warning, i then would contact the customer and sort things out, if i refunded, there were no chargeback fees...

Chargebacks are different to the resolution centre on Paypal. Chargebacks are when you login and the money has instantly disappeared because they have reported the transaction as fraudulent to their credit card company.

 

[gimme4free]

i am using a pro solution too... but the thing is... these chargeback rates are normal with all the protection that these guys provide... the industry looks like a mess!

and chargeback period for credit cards is around a year! so thats a bummer!

The industry is a f***ing mess, it's so difficult to earn a decent living selling anything online nowadays, legit/blackhat/product/service, too many people are sharing the ideas of how to do chargebacks, mainly kids with stolen credit cards that think they cannot get into trouble by doing one, not knowing that it is fraud.

There was a thread even on this forum the other day with someone saying that they had purchased a laptop with a stolen credit card on Amazon, how easy will that be to trace back.

 

[berrycorp]

It's rare to get a chargback without first having the chance to solve the problem.

I would get at least 1 warning, i then would contact the customer and sort things out, if i refunded, there were no chargeback fees...

well the problem is that i have a large business and i dont want to take a risk...

and joe can post on this blog saying "hey try pressing the dispute button in that companys case... and u will get a refund!"

i'll be in serious trouble.. and i want to cover risks before something like that happens.... call me over cautious if you want to but when you have big numbers playing it can be dangerous!

 

[crunch]

Try worldpay, when i used them they had fraud insurance, the processing fee was a little higher but they still paid if a customer purched with a stolen card.

 

[berrycorp]

The industry is a f***ing mess, it's so difficult to earn a decent living selling anything online nowadays, legit/blackhat/product/service, too many people are sharing the ideas of how to do chargebacks, mainly kids with stolen credit cards that think they cannot get into trouble by doing one, not knowing that it is fraud.

There was a thread even on this forum the other day with someone saying that they had purchased a laptop with a stolen credit card on Amazon, how easy will that be to trace back.

the problem is mainly when its electronic goods that have to be delivered immediately... and there is no verification like address etc req...!

and i read that stupid post too! some kids are really dumb! giving address with a stolen credit card! lol

 

[gimme4free]

well the problem is that i have a large business and i dont want to take a risk...

and joe can post on this blog saying "hey try pressing the dispute button in that companys case... and u will get a refund!"

i'll be in serious trouble.. and i want to cover risks before something like that happens.... call me over cautious if you want to but when you have big numbers playing it can be dangerous!

What is the site selling anyway? A physical or digital product? Can you share what type of product it is?

 

[berrycorp]

Try worldpay, when i used them they had fraud insurance, the processing fee was a little higher but they still paid if a customer purched with a stolen card.

sadly they dont accept paypal!

 

[crashed]

It's a cost of doing business, you can either pay the cost (either through a payment gateway or adding more complex services which will put consumers off) or factoring it into the purchase something selling for $11.99 is not going be much different to $10...

 

[berrycorp]

What is the site selling anyway? A physical or digital product? Can you share what type of product it is?

its a voip calling solution! so i need to give people credit to call right away + it costs me to terminate the calls!

i would run into huge losses if they buy credit, use it and then ask for a charge back!!

 

[crunch]

Maybe ive been out of it too long, when i had my online biz, people ran a mile when they saw paypal as the way to pay. Rank amatures used paypal....

 

[berrycorp]

It's a cost of doing business, you can either pay the cost (either through a payment gateway or adding more complex services which will put consumers off) or factoring it into the purchase something selling for $11.99 is not going be much different to $10...

first of correction: I have A BIG business!

and secondly IT DOES MAKE A DIFFERENCE in the industry in am in!

you go to skype and they offer 10k min at 2euros a month! do u really think they have a LOT of margins? the average usage is something like 600-800min per users.. hardly any money is left!

wake up.... u just cant pass on all the costs to the users coz u are stupid!

Maybe ive been out of it too long, when i had my online biz, people ran a mile when they saw paypal as the way to pay. Rank amatures used paypal....

you are probably doing business in afganistan!

paypal has a reach of something like 87% in US! much more than 24-25% of credit cards!

but if u have been out of business for like 4-5 years things might be diff!

 

[gimme4free]

Maybe ive been out of it too long, when i had my online biz, people ran a mile when they saw paypal as the way to pay. Rank amatures used paypal....

So you are saying that the majority of online businesses are rank amateurs? I'm sorry but I disagree with that statement, I rarely see a company that does not accept paypay.

 

[crashed]

Wow, this could turn into a flame and I really can't be assed with that. lets look at facts:

1. You want advice
2. You've not said what your selling/industry
3. You've not said how your selling it
4. You've not said what gateway your using

Now whose the stupid one? Thats just like the "I want to make money" threads that keep appearing.

Now bringing skype into the equation your getting into specifics, show me where you got the average usage data