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Any thoughts about not accepting cards as payment to avoid chargebacks?

2 points| zerp12 | 5 months ago

I am currently not accepting credit or debit cards as payment for my SaaS to avoid chargeback fees.

I have seen a few articles ( like https://www.reddit.com/r/paypal/comments/1juoa18/client_issued_a_chargeback_after_over_a_year_what/ ) mention that customers issued chargebacks even after 1 year. As I understand, if I take 12 payments in a year, 1 customer can potentially chargeback all 12 payments for a total of 12*15= $180. This seems like a lot of liability for a small business.

I am only selling with UPI ( Unified Payments Interface ) or net banking with Indian banks . This may be limiting but I do not have to worry about losing $15 - $30 for every payment that I receive.

Do you have any views to share on this ?

5 comments

sema4hacker|5 months ago

You get more sales when you accept cards. Chargebacks are a cost of doing business, and your pricing has to take that into account. If you get more chargebacks than is typical, you're probably offering a product or service that attracts the wrong kind of customer, and your processor might cut you off anyway. You probably shouldn't avoid accepting cards just because you assume you'll get too many chargebacks. You can accept cards to begin with, then refuse to do so if they don't work out for you.

dabinat|5 months ago

My SaaS service has had one chargeback in 12 years of business. In fact I’d argue the chargeback risk with SaaS is lower because if they do a chargeback you just cut off their access. With physical goods there’s nothing you can do if you already mailed it to them.

mikequinlan|5 months ago

As a customer, if I can't do a chargeback in the case where you don't provide the advertised services, I simply won't do business with you and will go to one of your competitors.

zerp12|5 months ago

With UPI, customers can raise a dispute and get their money back. As far as I know, the fee charged by some payment processors for UPI disputes is much lower than the fee charged for card disputes, or is non-existant, depending on the stage at which the dispute is resolved.

GianFabien|5 months ago

Slightly different angle: you are not concerned about the days/weeks of your effort being in vain, but you are concerned about a couple of hundred $?

The core premise of being in business is be willing to spend money to make money. If that makes you uncomfortable, then perhaps entrepreneurship is not really for you. And that is perfectly Ok.