This is How to Reduce & Eliminate PayPal Chargeback Fees
PayPal chargebacks can wreck your eCommerce operations, especially if you rely on the cash flow from your sales to keep your business running (this is where most people are). While you can do your due diligence to prevent chargebacks, there’s no foolproof method to avoid them altogether.
And, sadly, PayPal chargeback fees occur each time one is initiated.
Here’s how it works: A customer files a claim with their bank or credit card company saying that your merchant has breached an agreement between the two parties (you as a seller). The bank/credit card company then reviews their records for this transaction and decides whether or not there was anything wrong with it before approving it as a legitimate payment from one person to another.
If so, then they reverse transactions made through those channels until they find one where no wrongdoing occurred; then these reversed payments are added back into whatever balance currently exists at that point in time which will decrease available funds available for future purchases made via that same channel like email marketing campaigns, etcetera – basically anything besides regular credit cards (which aren’t reversible unless fraud has occurred previously)!
So, what can you do to optimize your costs and reduce or eliminate chargeback fees? Read on to find out.
Here’s what’s in store:
- Request a Pre-Arbitration Fee Credit from PayPal
- Contact PayPal’s Risk Department
- Review Your Credit Card & Bank Coverage
- Contact PayPal Customer Service & Ask for a Refund
- Initiate a Dispute with Your Credit Card Company
- See if You’re Covered Under PayPal’s Seller Protection
- Leverage Apps to Automate Processes
- Conclusion
Request a Pre-Arbitration Fee Credit from PayPal
If you’re tired of getting chargebacks, it may be time to take action. You can take control of your chargeback risk by calling PayPal at 1-866-922-2080 and requesting a pre-arbitration fee credit.
If you have a good case for why PayPal should issue a refund, they will send you one in return for an additional processing fee (usually $10-$15). To qualify for this service, all of the following must be true:
- Your transaction was completed through PayPal or with any one of its competitors, such as Amazon Payments or Google Wallet.
- The seller’s name and address match what is listed on their profile page; if not, please provide both pieces of information so that we can confirm their identity before issuing any refunds.
Contact PayPal’s Risk Department
If you are denied a payment, there are a few things you can do. Let’s say your customer didn’t pay and filed a chargeback against your business because they were unhappy with their order. You have 30 days from when the chargeback was issued to resolve it by contacting PayPal’s risk department (this is where we’re going next).
If at any point during this process, you feel like things are getting out of hand with PayPal and there won’t be another resolution before deadlines pass (and thus more fees accumulate), then contact them again but this time via email or phone instead of waiting 30 days for another chance at arbitration.
You’ll need to explain why things have escalated so much since last time—or just explain yourself again in general terms if necessary—and see if they’ll offer any sort of penalty credit or refund instead of charging another fee right away when filing an appeal!
Review Your Credit Card & Bank Coverage
You should review your coverage from Visa, Mastercard, or American Express cards as well as your business bank account. Most major financial institutes have a website that details how to dispute fraudulent chargebacks, as well as what coverage they provide. Many offer insurance to stay competitive and attract new business accounts.
If you want to see if your card company has a chargeback policy in place for PayPal transactions and what percentage of transactions are covered by the policy (or not), go to the website for your bank and review all policies and coverage—it’s likely cheaper than paying a fee directly from yourself!
Contact PayPal Customer Service & Ask for a Refund
If you have an issue with a chargeback on your account, contact customer service.
The easiest way to do this is via phone or live chat (which can be accessed through the PayPal website). You can also send an email if you prefer—just make sure it’s polite and concise, explaining why you think the chargeback fee should be removed from your balance.
If nothing else works, and they refuse to remove the chargeback fee from your account without getting additional information (which may or may not happen), then you still have options…
Initiate a Dispute with Your Credit Card Company
Chargebacks happen when a buyer disputes a charge with their credit card company. The dispute can be filed either in person or online, and it usually involves providing proof that the transaction was authorized by the buyer. If you’re able to prove that the transaction was legitimate, then you might get reimbursed for any disputed charges associated with it.
See if You’re Covered Under PayPal’s Seller Protection
If you’re not sure if you’re covered under the PayPal seller protection policy, check in n your account dashboard, and skim your credit card statements. You can also find out if you are covered by checking the full terms and conditions of your credit card. If neither of these methods works for you, contact PayPal and ask them whether or not your account is protected.
If you’re not covered, ask what you need to do to become eligible.
Leverage Apps to Automate Processes
What if you could automate the process of disputing charges, reduce chargeback fees, and eliminate them altogether? Well, you can! There are a number of apps on the market that will help you automate these processes.
The first step to reducing and eliminating PayPal chargeback fees is to use an app for your business. Apps let you schedule billing cycles so that they do not overlap with each other or with other payment methods like credit cards or bank transfers.
These scheduling tools also allow businesses to create recurring payments such as subscriptions and recurring invoices (e.,g., renewing a subscription) which means less manual input into their systems by employees who would otherwise have had all those extra steps involved in filing disputes themselves when customers disagree with their billing practices.
Here’s a good rule of thumb: If you can automate it, consider doing so because you will, at the very least, reduce human error.
Recommended: Kount and Midigator: The Ultimate Team in Fraud Prevention and Chargebacks
Conclusion
Chargebacks are bad for business — They’re a chargeback, after all. Whether or not you anticipate them, they can be very damaging to your business, and even worse, they can reduce the amount of money in your PayPal account by several hundred dollars per incident.
Use the advice above to reduce your costs, improve your cash flow, and keep your business purring like a Bentley.
Are you a Shopify seller who accepts PayPal payments? If so, download our free PayPal dispute resolution templates.
Chad is a Freelance Copywriter & the Founder of Jensen Copy. He's an expert in SaaS, technology, and travel (he's also done data center network maintenance, underwater repair, and CDL driving professionally). He's best known for providing a humorous, knowledgeable, no-B.S. view to everything he writes. Plus, he's fun to drink with -- Maybe he'll buy you a beer sometime and tell you some stories that should probably never be printed.
