Online Merchants Should Rethink Chargeback Policies: CyberSource

Many online merchants can add to their profits by automating reconciliation and aggressively fighting chargebacks, according to the 2008 ePayment Project Guide, a new report from CyberSource Corp., the Mountain View, Calif.-based provider of software for automating transactions for merchants with multiple sales channels.

According to the report, merchants fall into one of two camps–th­­ose that aggressively fight chargebacks and those that don’t challenge them at all. With the overall win rate on chargebacks at 42 percent, and the net recovery rate at 32 percent, those merchants who don’t fight chargebacks may want to rethink their approach, according to CyberSource. 

Online merchants who accept electronic payments can automate up to 90 percent of their reconciliation operations by tying it to order payment or payment reports, according to the report.

“The drive for global market presence is placing a premium on reconciliation projects for 2008,” the report said. “The projects that we see most prevalently pursued are those that streamline reconciliation.”

Standardized transaction reporting makes it easier to reconcile domestic card and alternative payments as well as payment types, the report said.

CyberSource recommends merchants make the centralization of payment systems a priority next year. This will help minimize costs and streamline PCI compliance. By eliminating silos of data storage, businesses can focus security efforts on the few remaining places where data is present rather than trying to secure several different pockets on the network.

CyberSource also expects many online merchants to further protect themselves from data breaches by storing payment data remotely within their processor or by having the payment fields within the payment page hosted by the processor.