I'm probably missing something but I never got the Merchant being on the hook for the chargeback. It should be the Credit Card Processor's liability for fraudulent charges (unless the merchant is actually at fault). If a stolen card is used to make a purchase, why is the merchant on the hook for this?
The madness of SaaS chargebacks
71–80 of 117 posts
Re: The madness of SaaS chargebacks
#72I am curious if Apple Pay has the same chargeback issues for merchants.
I know for sure that if users start filing complaints against you with Apple, they can simply ban your account entirely and for long. Some companies never recover from that and end up shutting down.
AMEX was/is the old-school equivalent of this. They would unapologetically ban merchants from accepting AMEX (forever!) after even a handful of complaints/chargebacks. This is also a key part of why you see some shops/restaurants with the "no AMEX" signs on their terminals -- don't be fooled by the "AMEX is too expensive to accept" red-herring, the actual difference for AMEX vs Visa/MC is ~1%[1], really not enough to matter for most businesses.
[1] Average brick-and-mortar interchange fees for Visa and MC range 1.85% to 2.6%, AMEX is 2.5% to 3.3%.
Re: The madness of SaaS chargebacks
#73> What I don’t understand is why some people can’t just reach out and request it — instead of going straight to a chargeback. Customers don't want to "reach out" if it means hunting deep in their account settings to find the cancel button, or calling a number which may or may not lead them through an endless phone tree to waste 5 minutes talking with someone on the retention team reading from a script. People don't r…
What I don't understand is why my banking app does not show a "cancel subscription" button with the payment. When I click that button, the recurring payment is automatically canceled, and the SaaS company can check that and know that I unsubscribed. Or something along these lines. There is already a power-asymmetry between consumers and companies. This should not extend to unsubscribing. Here, the consumer should hav…
The reason isn't technical. This isn't implemented because the entire card-processing ecosystem is hooked on the chargeback fees (min $15 to $100). It starts becoming a lucrative revenue stream for Visa/Mastercard/Stripe/Adyen/WorldPay/Fiserv and the entire ecosystem.
Merchant's end up getting the short end of the stick in most cases.
Re: The madness of SaaS chargebacks
#74I was angry at first as a small software provider. Then you understand there is nothing to be done and you budget it so it becomes the cost of doing business.
The most common charge back case is when a customer loses its card and the bank charges back all the transactions of the past X days no matter what. It is stupid but a lot of banks do it instead of asking the customer which transactions are legitimate.
Re: The madness of SaaS chargebacks
#75TL;DR: We run multiple SaaS products on Stripe. Even with clear renewal reminders, invoices and easy cancellations, some users skip refunds and go straight to chargebacks. A $10 payment ended up costing us $43.95 recently. Banks almost always side with the cardholder, and the only reliable “win” I’ve seen is when the customer withdraws the dispute themselves. So here’s my question to the community: What’s really goin…
My niche SaaS (monthly subs, no annual) gets about 1 or 2 chargebacks a year.
I give instant refunds, we are very lenient with our terms, and I've made the unsubscribe flow 2 clicks from email or dashboard (want to cancel? click. Are you sure? click. Done. Confirmation email). Every subscription email also includes short instructions on cancellation.
Even with a very customer friendly posture, the chargebacks fall into three categories:
- bad experiences with other companies, so instant chargeback instead of emailing or calling - miscommunication between customer departments (accounting doesn't know about the subscription and chargeback) - fraud or lying about usage
We've won about 50% of the chargebacks disputes. I recently added an admin interface that has a chargeback defense function that compiles evidence into a handy package I can upload to Stripe to dispute.
Re: The madness of SaaS chargebacks
#76Please make sure to set up Radar rules in your Stripe account.
Re: The madness of SaaS chargebacks
#77I'm probably missing something but I never got the Merchant being on the hook for the chargeback. It should be the Credit Card Processor's liability for fraudulent charges (unless the merchant is actually at fault). If a stolen card is used to make a purchase, why is the merchant on the hook for this?
>If a stolen card is used to make a purchase, why is the merchant on the hook for this?
Did they confirm the identity of the person matches the card?
If the merchant has no liability, if opens up a whole world of new fraud.
Re: The madness of SaaS chargebacks
#78Earlier quoted context omitted.
> the result are chargebacks it just means things cost more in general shrug . That's just the way it works. Make it easier to unsubscribe than doing a chargeback. Your competitors who do that will have a lower cost and be able to undercut you and you'll go out of business. That is a good thing.
> Make it easier to unsubscribe than doing a chargeback. Your competitors who do that will have a lower cost and be able to undercut you and you'll go out of business. How do you know people aren't already doing so? It's not about the competitors but the industry in general. Have you not read the post I was replying to? I quote: > People don't remember they signed up. > They can't remember how to log in from a differ…
Send an email saying "you're about to be charged, click here to cancel your membership"
Re: The madness of SaaS chargebacks
#79Please make sure to set up Radar rules in your Stripe account.
Yeah, we have that
Re: The madness of SaaS chargebacks
#80Controversial take here. Sue your customer. No really.
Banks operate on risk, make chargebacks risky.
Some of these chargebacks sound like straight up fraud. Three months of usage and using their bank to reverse a payment.
Make Fraud Spicy Again