As we move closer to 2022, there are a few things that businesses should know about potential changes to chargeback limits. Here is a detailed guide on what you can expect:
What Are Chargebacks?
Before we get into the nitty-gritty of chargeback limits, it's important to understand what chargebacks are. A chargeback is a transaction that is processed through a credit card issuer or bank instead of the merchant. Chargebacks can happen for a variety of reasons, but they are typically initiated by the cardholder.
There are two types of chargebacks: friendly fraud and true fraud. Friendly fraud occurs when the cardholder dispute a charge because they don't recognize the merchant, they were not happy with the purchase, or they were accidentally double-charged. True fraud occurs when the cardholder's information is stolen and used to make unauthorized purchases.
What Are Chargeback Limits?
Chargeback limits are the maximum number of chargebacks that a business can receive in a given period of time. These limits are typically set by the credit card issuer or bank. If a business exceeds the limit, they may be subject to additional fees or even have their account suspended.
What Changes Can We Expect in Chargeback Limits in 2022?
There are a few potential changes that businesses should be aware of when it comes to chargeback limits in 2022.
First, the major credit card issuers are likely to increase the chargeback limits for businesses. This is due to the increasing number of fraudsters who are taking advantage of businesses that have not yet implemented EMV chip technology. By increasing the chargeback limits, issuers hope to give businesses more time to implement EMV and reduce the amount of fraud that occurs.
Second, banks and credit card issuers may start to charge businesses more for chargebacks that exceed the limit. This is similar to how banks currently charge businesses for overdrafts. The goal is to recoup some of the losses that they incur when a business exceeds the chargeback limit.
Finally, some banks and credit card issuers may start to require businesses to have a certain amount of money in reserve in order to cover chargebacks. This is similar to how some businesses are required to have a certain amount of money in reserve to cover credit card refunds.
What Can Businesses Do to Prepare for These Changes?
There are a few things that businesses can do to prepare for the potential changes to chargeback limits in 2022.
First, businesses should consider implementing EMV chip technology. This will help to reduce the amount of fraud that occurs and may help them avoid exceeding the chargeback limit.
Second, businesses should make sure they have enough money in reserve to cover any chargebacks that may occur. This will help to ensure that they don't exceed the limit and incur additional fees.
Finally, businesses should keep an eye on their chargeback activity and make sure they are taking steps to prevent chargebacks from happening. This includes ensuring that customers are happy with their purchases and providing excellent customer service.
Chargeback limits are likely to change in 2022, but by taking some simple steps, businesses can prepare for the changes and avoid any negative impact.
