Annual Chargeback Report & Statistics

Part 4

November 4, 2020

This is the last in a four-part series covering a year in chargebacks and its impact on merchant revenues for 2020. For access to previous selections, use the following guide:

We hope these reports have offered insights regarding chargeback trends and merchant options for mitigation.

Let’s dive right into the final chapter:

High Risk Countries

Taking business operations into a new market requires no shortage of research, and calculating the potential revenue and anticipated risk are the best indicators of success.

There are surprising results among the 15 lowest and 15 highest chargeback-to-transaction ratios by country:

Low & High Risk Countries

Consistent year-over-year trends were evident among certain countries. Peru India and Dominican Republic rank among the highest chargeback-to-transaction ratios while Norway, New Zealand and Sweden rank among the lowest between 2017 and 2019.

Between 2018 and 2019, merchants acquired a 269% increase in international sales. Despite the high-risk nature of the many new market entered, merchants processed more transactions rather than fewer. Taking the risk, by all accounts, was the right business decision.

Larger volumes of transactions yielded data for analysis, thus enabling better predictions and more accurate decision-making. The resulting change meant higher transaction volumes decreased chargeback-to-transactions ratios between 2018 and 2019.

Evaluating risk, therefore, requires a multifaceted approach: analyzing customer preferences, politics and community health are as important as the rate of transactions itself.

Dispute Prevention

As with assessing risk, evaluating chargeback prevention methods involves a multi-layer strategy. Applying different tools and actions in relation to customer experience can often change key outcomes in a merchant’s favor.

It is important to remember, however, that mitigation and prevention are not 100% guarantees of success. And while “some strategies have accurate metrics to gauge chargeback prevention, [they] don’t factor in the risk of false positives.” Taken as a whole, chargeback prevention tools quell customer friction and enable swift resolutions that avoid costly fees.

Study Participants with Best Prevention Outcomes

Of the merchants that invest in prevention tools (such as alerts and order validation), 56% resolved 30% or more of their dispute pools in 2019.

Percent of Merchants Who Use Prevention Alerts

Customers Who File Multiple Chargebacks

The majority of these disputes—61.36%—were single dispute events between a cardholder and merchant. A significant portion of just over 38% accounted for repeat chargeback initiations, highlighting the necessity for a comprehensive prevention strategy.

COVID-19 has disrupted the status quo related to chargeback trends and the insights that can be gained from them. This report intends to offer a few of those key insights and their effect on merchant strategies for revenue growth and retainment.

Midigator, among other chargeback prevention tools, assists with dispute prevention and monitoring to ensure chargebacks are handled prior to card issuer involvement. We hope this report has proved fruitful in your understanding of chargebacks in 2020.

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