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Effective November 9, 2020
PayPal, Stripe, Square, WorldPay and leading payment processors announce three new policies.
- https://www.fisglobal.com/en/insights/merchant-solutions-worldpay/article/chargeback-q-and-a-issues-related-to-covid-19
- https://www.paymentsjournal.com/businesses-warned-of-surge-in-opportunistic-chargebacks-fueled-by-covid-19/
- https://www.paypal.com/ga/webapps/mpp/ua/upcoming-policies-full
- https://www.wsj.com/articles/hit-by-coronavirusand-a-30-holdback-by-the-payment-processor-11592040601
- https://www.paypal.com/us/webapps/mpp/ua/useragreement-full
20% up 30% Reserve Hold On Funds
Leading payment processors will set aside and holdback 30% of a seller's revenue.
The Reserve Hold Account is to cover possible losses due to disputes /chargebacks, claims, or payment reversals.
A dispute/chargeback exists when a customer requests a refund of a purchase through their credit card company.
Higher Dispute Fees
In mid-October, PayPal, Stripe, Square, and WorldPay announced they will begin adding “dispute fees” and other costs to merchant accounts.
“We are establishing a dispute fee and its terms and conditions for sellers.”
See official notice.
Prior to the rate hike, dispute fees were established at 2.90% + $0.30 cents.
21 Day up to 180 Waiting Period For Deposit
Processors like PayPal Holdings Inc., Stripe Inc., Square Inc. and Worldpay are making some businesses wait additional days or weeks to access funds deposited in their accounts.
The companies cite the need to protect themselves against possible losses when buyers seek refunds.
See official notice.
Read more
April 2020: Trouble Identified
Consumer credit card charge-backs skyrocket from an industry norm of 0.5% to a historic 20%. The travel industry experienced a 300% increase in credit card chargebacks. [Source: PYMNTS.com. April 9, 2020]
June 2020: Mitigation Plans Drafted
CEO of Chargebacks911, predicts an overhaul in chargeback rules and procedures. He was right. New rules take effect November 1, 2020. [Source: Yahoo News. May 26, 2020]
September 2020: Catastrophic Damage
Customer disputes and friendly-fraud transactions continue to climb. Numbers sit at 20% to 40% above pre-COVID-19 stay at home shutdown orders.
References Sources
1 https://www.paymentsjournal.com/businesses-warned-of-surge-in-opportunistic-chargebacks-fueled-by-covid-19/
2 https://www.fisglobal.com/en/insights/merchant-solutions-worldpay/article/chargeback-q-and-a-issues-related-to-covid-19
3 https://www.paymentsjournal.com/businesses-warned-of-surge-in-opportunistic-chargebacks-fueled-by-covid-19/
4 https://www.paypal.com/ga/webapps/mpp/ua/upcoming-policies-full
5 Hit by Coronavirus—and a 30% Holdback by the Payment Processor – More people are demanding refunds for things bought before the pandemic. PayPal, Square and others are trying to protect themselves, but it’s coming at the expense of businesses that use them.
Instant Bank Direct Debit (Verde)
The perfect alternative to credit card processing or an addon. Don't get rid of your credit card processor. Simply include Instant Bank Direct Debit as a backup safety net.
Customers Pay online with Their Bank account
Lets online shoppers pay online using their bank account. Fees and pricing are 200% less than credit card transactions and funds settle on the same day.
preferred payment method among millennials
For millennials, debit payment via a digital wallet is the preferred and fastest growing transaction method. Venmo, ZellePay, CashApp, Google Pay & Apple Pay being the most popular. [Pymnts.com. Oct. 17, 2019]
No risk of chargebacks
By using Instant Bank Direct Debit (Verde), credit card chargebacks become a thing of the past. They don't happen because credit cards are not used in pay-by-bank transactions.
