6 ms·

Have you actually gotten a lot of chargebacks? I've heard that the industry significantly exaggerates the amount of chargebacks that actually occur.

• tansey 16y ago
  We haven't launched yet, but we're a digital goods marketplace and my intuition is that our niche audience may have a high chargeback rate. We're looking for any additional protection so we don't stumble out of the gate.
  • bprater 16y ago
    Use Clickbank then. Everything you mention is what they've been doing for a decade.
    • tansey 16y ago
      Thanks. I had never heard of Clickbank before now. However, a quick look at their terms is a non-starter. They want 8.5% + $1 + 50% to the affiliate. On top of what we would charge, our sellers would be getting something like 30% of their sales. It's also not exactly the type of product we're selling. There are some subtle (but important) differences between Clickbank's target product and our product.
• SwellJoe 16y ago
  Chargebacks are such a pain in the ass that any number of chargebacks is a lot, in my book. One of the reasons I chose PayPal when we were switching providers a while back was to get better, and finer-grained, anti-fraud capabilities. It's still an issue, but it's manageable now. Interestingly, adding a really expensive product (about $1000) to our store provided a nice mechanism for catching fraud. Nearly 100% of our fraudulent orders purchase the really expensive product right off the bat, while most of our legitimate purchasers of that product buy a less expensive one first, and then upgrade to the more expensive version later. So, I automatically flag orders for the most expensive product, and interact with the customer personally before letting the order go through. This is also a pain in the ass, but it does reduce the number of chargebacks.
  • tansey 16y ago
    We were thinking of doing a similar approach, basically verifying people's ID upon first purchase. However, we thought it might significantly decrease the number of customers. I suppose there's no free lunch here... verification will sacrifice volume.
    • matasar 16y ago
      You may run afoul of the credit card companies if you try to verify ID on purchase.
      • tansey 16y ago
        How so?
        • matasar 16y ago
          In some states in the US, it's illegal to ask for id for a credit card purchase. In all states, the credit card companies don't like it. Here's a good set of google answers about the issue: http://answers.google.com/answers/threadview?id=71792 http://answers.google.com/answers/threadview?id=71792 This is all to say, credit card processing is incredibly complicated. Here's another quote, directly from the federal government [1]: "MasterCard wants to hear about merchants who break their rules. Send the name and address and an account of what happened to MasterCard International, c/o Radio City Station, P. O. Box 1288, New York, NY 10101. The merchant's bank will get a stiff letter, ordering it to investigate and bring the offending store into line - or pay a $2,000 fine. Visa enforces the same rules as MasterCard. "When we hear about a violation, we ask the bank that signed the merchant to get together with the merchant and see that the practice is stopped," Visa representative states. To report a merchant, send a letter to the bank that issued your Visa card. American Express also prohibits merchants from asking for IDs. "All a merchant is supposed to do is take an imprint, make sure the signature matches and swipe the card through the terminal, to get authorization." [1] http://www.in.gov/dfi/2554.htm http://www.in.gov/dfi/2554.htm