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Everything Merchants Need to Know about False Declines

For more than a decade, chargebacks were simply part of the cost of doing business. Merchants understood that where there were sales, there would also be chargebacks. This is no longer the case, especially for merchants that hover around the 1% of sales/100 chargebacks-per-month threshold. Merchants cannot afford to brush chargebacks under the rug.

Why? These merchants risk losing their merchant account services. Without a merchant account, they will be unable to accept their customers debit and credit card transactions.

Another issue are false declines. Many merchants say that false declines are a bigger problem for their business than chargebacks. Either way, both are a serious problem for any merchant. In fact, if left unattended, they can quickly lead to a business having to close their doors.

Consider the following alarming figures on false declines:

  • It is forecasted that there will be $2.8 trillion in online shopping transactions in 2019.
  • 6 percent of online orders will be declined.
  • 30-70 percent of those declines will actually be legitimate, resulting in $48.5 billion in lost sales. (A loss for not only merchants, but payment processors and acquiring banks).

The Truth about Damaging False Declines

When it comes to merchant account services, you will often hear that obstacles like false declines are just ‘the cost of doing business’. In reality, it is critical to your business’ success that you prevent chargebacks and false declines. Consider the negative effects false declines alone can have on your business’ growth:

Brand reputation. Consumers today share their experiences with brands with their friends and family, whether it’s by word of mouth, social media or review sites. One, negative review has long lasting effects and missed opportunities.

Cost and strategy. Think about all of the time, strategy and expenses that go into your brand. From drawing traffic to your website to social media promotions. Every legitimate sale that is falsely declined is cost and strategy wasted.

Customer experience. Unfortunately, a false decline can damage the customer experience. If their payment is repeatedly turned down, it can lead them to take their business elsewhere. Their business is not only won by a competitor, but you likely lose the opportunity to win a repeat customer.

Where to Find Support and Solutions

Finding a merchant account provider that understands the obstacles your business faces is important. There are merchant account services available that are specifically tailored to meet your needs. For example, if your industry is known for high chargeback rates, an alternative lender can help you successfully prevent chargebacks and manage false declines. Make sure you compare the merchant services and features each provider has to offer, and choose the processor that is right for you.

Author Bio:Electronic payments expert Blair Thomas co-founded eMerchantBroker, serving both traditional and high-risk merchants. His passions include producing music, and traveling.