Chargebacks are one of the most frustrating things that can happen in your subscription business. You’ve delivered a service, provided support, and worked to ensure your customers have a great experience. Plus, you’ve provided clear escalation routes when things do go wrong, but still, you see chargebacks appearing in your payment gateway. It’s incredibly frustrating, but do you know how much it costs your business? Here’s everything to consider when calculating the cost of chargebacks on your bottom line.
You’ll pay a chargeback fee to your payment gateway every time a customer issues a chargeback against your business. These can be between $7.50 and $27.00 depending on which gateway you use. You’ll often see the fee is refunded if you win the dispute, but if you lose, you’re out for both the cost of the fee and the associated refund.
The barrier of proof to win a chargeback can often seem dauntingly high, so you’ll find yourself issuing refunds that you consider to be unwarranted. Depending on the cost of your product, this might be very expensive. Additionally, if you’ve already delivered the service, you’re out for the underlying cost of the product too.
The human cost of chargebacks
Don’t forget the human cost you’ll experience from chargebacks. Completing the paperwork, gathering the necessary evidence and working to dispute both accurate and spurious chargeback cases can have a huge impact on your bottom line.