Chargebacks plague penny auction merchant accounts with a determination that can be described as dogged. Whether or not you’ve started your penny auction website already, the damage is done. Penny auction merchant accounts are considered high risk in large part thanks to the high chargeback rates that happen so frequently to penny auction companies. Effectively managing your chargebacks can help your business’ bottom line recover the damage, and money, lost to chargebacks.
Why do Chargebacks Happen so Often?
Of course, as with any business dependent on electronic transactions, there is a chance of fraud. Penny auction sites experience chargebacks at a much higher rate than other kinds of online businesses. Chargebacks are so common with penny auction websites because in any given auction there’s one winner and many losers. Those who lose out on penny auctions are dissatisfied customers who are likely to try to recover the money they spent by demanding a refund and creating a chargeback.
The other common occurrence is that the customer simply doesn’t understand the function of your website and how penny auctions work. If they don’t understand the terms and conditions they may accidentally create a chargeback and, accidental or not, that’s bad for your business.
How can I Set Up a Penny Auction Merchant Account if they’re Considered High-Risk?
Most traditional domestic banks will turn your penny auction business down for a merchant account due to the risk associated with chargebacks. Yet, overseas banks and online merchant services providers can readily help you set up a merchant account for your penny auction site.
How can I Manage my Chargebacks?
The expert team at eMerchantBroker can help you find a penny auction merchant account tailored to your needs while also helping you manage your chargebacks with the eMerchantBroker Chargeback Shield. The Chargeback Shield notifies you immediately of a disputed charge and allows you to refund or contest the charge. This brings you, the merchant, back into the decision making loop while most other merchants aren’t even aware of a chargeback until it’s too late.
Another strategy is to make sure your terms and conditions are clear so any customers on your site understand how your service operates. You may also higher a merchant account manager to help you manage your chargeback rate. Ultimately, the best approach is to be sure your penny auction merchant account provider can handle the elevated chargeback rate associated with penny auction sites.
Understanding and managing chargebacks is a fundamental part of running a penny auction website. The chargeback rates are regrettable but with effective management you can minimize the impact they have on your business and your bottom line.