In a perfect world, your Black Friday customers would always come to you to resolve payment disputes directly, and no bad actor would ever get past your fraud detection mechanisms.
Unfortunately, more often than not, customers turn first to their banks to settle disputes. One too many, and suddenly you find your business facing higher fees and rates as a result.
Cyber criminals certainly aren’t slowing their roll, either. In the UK alone, holiday shoppers were scammed out of more than £11.5m during 2023. Black Friday fraud attempts are becoming increasingly prevalent in Europe, with Euro News reporting that three out of four Black Friday emails are linked to scams themed around the shopping event.
For merchants and others in the ecommerce industries, it’s a double-edged sword. On the one hand, Black Friday and similar events bring a massive surge in sales that can make up a sizable portion of your annual revenue. On the other, more payments means more disputes and fraud attempts.
How you handle chargebacks and refunds during Black Friday can define your peak season success.
Understanding refunds vs. chargebacks on Black Friday
Both refunds and chargebacks can impact your peak shopping season revenue, but why they occur and how they are resolved can differ quite a bit.
Refunds are customer-initiated requests for the return of funds in exchange for a faulty or missing product. For subscription-based business models, customers may request refunds if they are unhappy with a service provided. A refund is typically settled directly between your business and the customer, without requiring a bank to intervene and process the return of funds.
Chargebacks, on the other hand, are bank-initiated and often linked to disputes or suspected fraud. When a chargeback occurs, the customer must first dispute the charge with their bank. In some cases, the bank itself may identify a potential instance of fraud and contact the customer to validate the purchase. A chargeback bypasses the merchant altogether to process the return of funds, potentially incurring additional fees or higher transaction rates for the merchant.
What’s causing Black Friday chargebacks in Europe?
Black Friday, Cyber Monday and other peak-season sales events bring both massive sales opportunities and a heightened risk of chargebacks. Delivery delays caused by logistics bottlenecks or poor inventory management can result in customers demanding refunds. On top of operational concerns, you also need to manage fraud detection effectively to avoid additional chargebacks from unauthorised transactions.
In Europe, there are several additional regional considerations to keep in mind:
- European law & consumer protections: Europe has a variety of regulations that dictate how a merchant must manage their digital payments systems, such as the Payment Services Directive (PSD2) and the General Data Protection Regulation. Along with your domestic compliance requirements, managing returns and chargebacks across multiple jurisdictions requires you to pay close attention to the local regulations in the areas where you operate.
- Regional & local payments support: Region-specific payment methods are a necessity for reaching the maximum number of customers on Black Friday. For example, the European Payments Initiative (EPI) recently launched Wero, a unified account-to-account payment solution and digital wallet designed to simplify payment across Europe. Failing to support the right mix of options can push buyers toward chargebacks when payments don’t process smoothly.
- Cross-border money movements: As you extend your reach across borders, you must ensure you have the tools in place to support multiple currencies and optimised payment routing. Cross-border fees can rack up your transaction costs. Having the means to streamline international payments can be the key to maintaining your cash flow visibility.
Improving your chargeback management strategy in four steps
While some disputes are inevitable, the right approach can minimise your losses to chargebacks and preserve your relationships with both banks and customers. Following the four steps below can prepare you for the influx of payments coming your way this Black Friday:
1. Optimise your payment gateway
Your payment gateway is the first defense against disputes and chargebacks.
It should be fine-tuned for peak season with a tailored configuration that can flag suspicious transactions while allowing legitimate ones to pass through smoothly. The payment gateway provider you select can also have an impact on your payment gateway’s effectiveness. Look for providers that offer features for automation and multiple payment method support.
2. Strengthen your fraud prevention
Fraudulent activity typically spikes during peak sales events. Go beyond basic fraud detection by integrating machine learning and AI–powered tools that analyze transaction patterns in real time.
Pairing standard fraud scoring and compliance requirements with custom fraud rules and pre-authorisation tools can help you design your fraud prevention strategy around your business logic without over-complicating your checkout experience.
3. Streamline your refund and returns process
Customers frustrated with slow or unclear refund policies often resort to chargebacks.
Creating a transparent, easily accessible return and refund policy on your website, encourages your customers to resolve issues directly with your business instead of involving their bank. Automating refunds through your payment system can speed up the process, improving customer satisfaction and decreasing the risk of disputes escalating to chargebacks. This also helps maintain healthier business financial accounts, avoiding surprise losses from sudden bank-initiated chargebacks.
4. Unifying your business finances
Efficient financial management is crucial during high-volume sales periods.
Monitoring chargeback ratios closely prevents penalties from payment providers and gives you valuable insights into recurring problems, such as product categories or regions with higher dispute rates. A business account solution that can provide access to a multi-currency IBAN and real-time financial control is a must for keeping your finances and fraud measures aligned during Black Friday.
Prevent chargebacks & make money flow with payabl.
Black Friday and Cyber Monday deliver immense sales opportunities, but without a strong chargeback and refund strategy, they can just as easily erode profits. Investing in advanced fraud prevention and financial management tools are essential for keeping your money in motion throughout peak season.
At payabl., we give you total control of your money across all channels and risk environments. Our dedicated support teams help you navigate complexity and take charge of your chargebacks.
Want to discover more about how you can improve your online checkout experience during Black Friday and beyond? Read the ebook, Is your checkout Black Friday ready?