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Online payment systems! Avoiding chargebacks.

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  • 08-04-2014 8:00pm
    #1
    TemujinKhan
    Registered Users Posts: 37 ✭


    Hi all,

    I have been looking through the various types of payment methods available to an e-commerce site. The most popular being Paypal, google wallet etc..

    The product that I am working with is very susceptible to transaction chargebacks and has been known as a target for scammers.

    As far as I understand it Paypal holds the payment made by the buyer in the sellers account for 21days before sending it to the sellers bank account. I guess this is to protect the transaction and I would think that chargebacks are only possible within this time.

    I have been looking for a payment system that clears the transaction more quickly, so that I could wait maybe a few days before sending the product after payment (being upfront with the buyer to reasons for this). And this would protect me from chargebacks..

    Well thats the idea anyway. I have been finding it very difficult to get hold of this information for the different online payment systems.

    I was wondering if anyone here had any experience on this issue or could shed some light on it?

    Best regards,
    Kevin.


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    #2
    srsly78
    Registered Users Posts: 7,157 ✭✭✭srsly78


    If it's that much of a problem accept SEPA bank transfer only. This is pretty common in Germany with online stores, much to the consternation of Irish buyers. No chargebacks, and no middlemen taking cut (if within the eurozone).


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    #3
    MagicMarker
    Banned (with Prison Access) Posts: 32,865 ✭✭✭✭MagicMarker


    You're going to tell your buyers that you're going to hold off shipping for a few days so they can't get a chargeback done?

    Well… good luck with that.


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    #4
    The Pontiac
    Registered Users Posts: 3,417 ✭✭✭The Pontiac


    TemujinKhan wrote: »
    As far as I understand it Paypal holds the payment made by the buyer in the sellers account for 21days before sending it to the sellers bank account. I guess this is to protect the transaction and I would think that chargebacks are only possible within this time.

    I have an e-commerce site and PayPal payments are instant. I also use Stripe and they hold the money for 7 days (but a slightly lower percentage rate of transaction).

    For the record, 75% of my customers opt for Stripe (Credit card payment). I was surprised at that.

    Stripe is so simple to set up, you wouldn't believe it.

    Where are you getting the 21 days from? Would it not be 21 days to open a dispute, or something along those lines?


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    #5
    TemujinKhan
    Registered Users Posts: 37 ✭TemujinKhan


    srsly78 - Totally agree, SEPA is a great payment system, its the awkwardness of it, as you were saying 'much to the consternation of Irish buyers'. I am going to use SEPA as a basis, but I would also like to provide the option to use a creditcard/paypal system too (which therein lies the risk of the chargeback).

    The Pontiac- 75% of your customers use credit card! Thats a lot. This would be the downside of a solely SEPA based structure. What other payment method do you provide?

    MagicMarker - It would be the customers choice to use the easier payment system (credit card/paypal) and wait x amount of days before receiving product, or use SEPA. The reason for the option is to provide a better range of service.


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    #6
    The Pontiac
    Registered Users Posts: 3,417 ✭✭✭The Pontiac


    TemujinKhan wrote: »
    The Pontiac- 75% of your customers use credit card! Thats a lot. This would be the downside of a solely SEPA based structure. What other payment method do you provide?

    I use PayPal, and then Stripe for credit card transactions.

    I'm surprised that only 25% opt for PayPal. I was expecting it to be the reverse.

    Stripe is the easiest thing in the world to set up. It is also one of the best shopping carts out there imo.


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    #7
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    The Pontiac wrote: »
    I have an e-commerce site and PayPal payments are instant.

    Payments into the PAYPAL account may be instant but in certain circumstances they will not allow you withdraw the money into your own personal account to cover any chargebacks. Not sure that they use a figure of 21 days sales to calculate this holding balance figure but it would make sense.

    dbran


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    #8
    JonBon27
    Registered Users Posts: 95 ✭✭JonBon27


    Chargebacks can be initiated up to 6 months after a transaction has taken place.

    I suggest you speak with your bank about having Verified by Visa and Secure Code on your website as this shifts the liability to the issuer.


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    #9
    JonBon27
    Registered Users Posts: 95 ✭✭JonBon27


    For fraudulent transactions, not item not received issues


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    #10
    bdo
    Registered Users Posts: 227 ✭✭bdo


    While Verified by Visa may shift liability to the issuer, my experience is that you can lose up to 25% of the transactions as a result of transaction abandonment due to Verified by Visa.


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    #11
    JonBon27
    Registered Users Posts: 95 ✭✭JonBon27


    25% are fraudulent!


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    #12
    The Pontiac
    Registered Users Posts: 3,417 ✭✭✭The Pontiac


    dbran wrote: »
    Payments into the PAYPAL account may be instant but in certain circumstances they will not allow you withdraw the money into your own personal account to cover any chargebacks. Not sure that they use a figure of 21 days sales to calculate this holding balance figure but it would make sense.

    dbran

    Maybe under certain circumstances, but I can (and do) withdraw from my paypal account the same day, and it arrives in my account within two working days.


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    #13
    D Hayes
    Registered Users Posts: 511 ✭✭✭D Hayes


    If you're looking at reducing chargebacks, could be worth checking these guys out - trustev.com. Cork-based company, making huge advances in eliminating fraudulent online payments.


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    #14
    bdo
    Registered Users Posts: 227 ✭✭bdo


    JonBon27 wrote: »
    25% are fraudulent!

    No, in my case, the majority weren't potentially fraudulent; we had many instances where the customer called us up, explained the Verified by Visa issue and paid for the product another way instead.


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    #15
    GoodBridge
    Closed Accounts Posts: 201 ✭✭GoodBridge


    Same experience here as bdo. Switched on the Verified and had abandoned carts all over the place -similar level actually, around 25%. Switched it off and business resumed.

    That said, I wish there was something more that could be done when the obviously fraudulent transactions come in. Gardai, nor processor, nor issuing bank give a flying f about it. Why would the financial entities anyway? They get paid either way -plus levy a charge on top of a chargeback.


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