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  1. #1
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    Credit card processing with 85% chargeback rate

    Are there any credit card processors that will accept an 85% chargeback rate? 60 day hold on the funds is fine.
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  2. #2
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    I doubt it, that type of percentage seems like it would get the processor into as much trouble as whoever is getting those charge backs. The fees alone seem like it would toss someone under water =\
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  3. #3
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    My service is targetted at children, who often buy with their parent's credit card without their permission, with a chargeback rate of 70-90%. Is there no one that can process this?
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  4. #4
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    I often wondered what the charge back is like to a large mobile game provider.. so easy for kids to buy virtual items from a mobile phone and then leave the parents in shock.

    Perhaps use someone like Maxmind who will verify via phone for 0.20 cents. That could eliminate alot of the problems without having to pay a huge premium on fees.
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  5. #5
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    You can check Jumio.com - they claim to prevent chargebacks by turning the transaction to a "card present" type - the customer has to show their card to a webcam to complete the payment, and they are shooting video of the card and then analyzing it. I haven't tried them myself, but maybe it is worth checking them.
    What is your average transaction amount actually? If it is something small you can also try "pay by sms" services, but they take very very high commission.
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  6. #6
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    Quote Originally Posted by rds100 View Post
    You can check Jumio.com - they claim to prevent chargebacks by turning the transaction to a "card present" type - the customer has to show their card to a webcam to complete the payment, and they are shooting video of the card and then analyzing it. I haven't tried them myself, but maybe it is worth checking them.
    What is your average transaction amount actually? If it is something small you can also try "pay by sms" services, but they take very very high commission.
    Average amount $200, volume $50,000 - $80,000 per month. I'll look at jumio.What if the customer doesn't have a cam though?
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  7. #7
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    What is the average transaction amount?
    The web hosting market will never die. Virtual environments are forever the future and easily adapt to change. Welcome to the world wide web!
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  8. #8
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    Quote Originally Posted by n!ghtmare View Post
    Average amount $200, volume $50,000 - $80,000 per month. I'll look at jumio.What if the customer doesn't have a cam though?
    $200 is a lot, no wonder the parents don't like it.

    Everyone has a cam these days, especially kids AFAIK jumio still offers the option to pay the old fashioned way (i.e. by typing the credit card information), not sure if you can disable this or not.
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  9. #9
    Key problem with that big chargeback precentage is that issuers do not allow it, so I doubt you will find any processor who will say ok to that number.
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  10. #10
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    Short answer: No. Chargebacks above 2-3% throw up all sorts of red flags and fines for everyone involved.

    If you have a legitimate business and have an 85% chargeback rate, you're doing something wrong -- be it marketing to the wrong audience or insufficient controls during the payment process. Maybe you need to incorporate some ID verification functionality from one or more credit bureaus -- somewhat costly but cheaper than your 85% chargeback rate. Maybe use a card registration process with a lengthy "we got you by the short hairs" contract acceptance -- similar to Paypal (which BTW is very cardholder unfriendly -- but people accept it anyway).
    --Steve (blog)

    Shift4 Corporation -- Secure payment processing
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  11. #11
    Join Date
    Nov 2005
    Location
    Michigan, USA
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    Can you enable Verify by Visa or Mastercard Securecode? Using that and phone verification should stop a majority of your chargebacks. Like others have said, getting that many chargebacks means your doing something wrong.

    Isn't it costing you a lot in fees? You would think you would want to reduce the chargebacks, not change the merchant.
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  12. #12
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    Apr 2003
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    One additional note -- at an 85% chargeback rate, I'm really surprised the merchant is still in business. The fees for the 85% is probably almost entirely eating up any profits from the remaining 15%. If the average ticket is $200, and your discount rate is 3% (which I would not be surprised if it were higher), that means the average ticket is costing you $6 and some change. These fees you don't get back when the chargeback occurs. In fact, you're probably getting more fees tacked on. I've seen several MSP's charge $20 per chargeback request -- win or lose.
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  13. #13
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    It's ridiculous to even be talking about a merchant account for a merchant with an 85% chargeback rate. Not going to happen. Ever. Anywhere. Period.
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  14. #14
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    Should probably do a Verified by Visa and/or combined with a phone call to the buyer to verify their age. That way you can void the charge if done without parental permission.
    John Rasri
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  15. #15
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    Quote Originally Posted by n!ghtmare View Post
    My service is targetted at children, who often buy with their parent's credit card without their permission, with a chargeback rate of 70-90%. Is there no one that can process this?
    This is illegal and you are required to give such money back.Childeren cannot buy anything online unless with permission from there parents or legal guardian.By the way you are also not permitted to ask or store any private information about minagers and you must follow coppa(Childeren online privacy protection act. http://www.coppa.org
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  16. #16
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    Mar 2009
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    St. Louis, MO
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    Quote Originally Posted by n!ghtmare View Post
    My service is targetted at children, who often buy with their parent's credit card without their permission, with a chargeback rate of 70-90%. Is there no one that can process this?
    When I read this, my first thoughts were - Yipes, I can't believe he's telling the world he's doing this. You won't find anyone that will do this legally.
    Infusing Markets LLC
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  17. #17
    This has to be a troll / fake post. Was that posted on April's fools day by any chance?
    David Goodale
    Merchant Accounts.ca
    Canada's merchant account provider.
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  18. #18
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    I think perhaps he used the wrong wording there. Probably what he is getting at is that his service by nature is more attractive to the younger generation who use their parents cards and of course it ends up getting charged back in a significant number of cases.

    Could be wrong though
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