At Trustap, we talk about chargebacks a lot, but many businesses underestimate just how damaging they can be. More than just an occasional nuisance, chargebacks cost time, money, and resources, eating away at your revenue and your margins. Worse still, nearly one-third of chargebacks are fraudulent, meaning businesses are losing money through no fault of their own. For e-commerce stores, especially those selling high-value or high-volume items, the impact can be significant.
So, how can you protect your business? Understanding chargebacks and their effect on your business is the first step, and having the right protection in place is the next.
What is a chargeback?
A chargeback occurs when a customer disputes a transaction with their card provider, resulting in a reversal of payment. For e-commerce businesses, chargebacks are a persistent and costly issue. They vary by country and industry, but most merchants feel the impact. Sometimes, this happens due to legitimate issues, like non-delivery of an item or an unauthorised transaction. However, a significant portion of chargebacks are actually a form of fraud (sometimes referred to as “friendly fraud”) where a customer falsely claims a problem to get their money back while keeping the product.
A staggering 34% of chargebacks are due to fraudulent rather than legitimate reasons and this is an issue that is becoming more prevalent, with 55% of Gen Z and 49% of millennials earning over $100,000 a year admitting to taking part in such digital shoplifting in the past year. By 2026, chargebacks are expected to rise 42% compared to 2023.
Chargebacks are widespread, and fighting them is no small task. Merchants must go through a lengthy dispute process—gathering evidence, submitting claims, and waiting for decisions—when they could be focusing on growing their business instead.
When running a lean e-commerce business, each minute of this is felt, and instances of chargebacks are only growing.
Why Chargebacks Are More Than Just a Nuisance
Chargebacks aren’t just a temporary headache; they can have a serious impact on your bottom line. For businesses selling high-value products, the risk is even greater.
The cost of a chargeback can climb to as much as ten times the original transaction value. This is largely due to the time and resources required to dispute it (a process that can drag on for up to six months) combined with the original cost of inventory. And we haven’t even mentioned the added stress it creates!
For high-volume merchants, chargebacks are sometimes written off as a cost of doing business, as the time to dispute them might not seem worth the overhead investment. But with chargeback volume on the rise and platforms or processors charging flat fees for each chargeback, merchants can leave a lot of money on the table.
Success rates depend on the industry, quality of evidence, and the reason for the dispute, but despite efforts, merchants only win 20-30% of chargeback disputes on average.
Where Does Trustap come in?
Trustap is an end-to-end transaction solution, handling payments, fulfillment, and support for your e-commerce store. A key part of our support offering is chargeback protection.
When you work with Trustap, you gain access to our world-class support team, experts in dispute resolution, who handle the entire process so you don’t have to. Armed with years of experience and advanced tools, our team gathers the necessary evidence and fights disputes on your behalf. As a result, Trustap’s win rate is 2-3 times the industry average.
If chargebacks are stealing your time, it’s hurting your business and ultimately affecting your bottom line. Reach out to Trustap to discuss how we can fix that.
