Chargeback Solutions for BNPL Providers

Key Takeaways:

✅ BNPL chargebacks cost merchants millions annually in lost revenue and fees
✅ Ethoca (Mastercard) and Verifi (Visa) can reduce disputes by 30-40%
✅ 5 actionable strategies to protect your BNPL business

Why BNPL Services Face Rising Chargeback Risks

The Buy Now, Pay Later (BNPL) industry is projected to process $437 billion in transactions by 2027 (Worldpay). However, its rapid growth comes with major chargeback challenges:

📌 Top 4 BNPL Chargeback Causes:
1️⃣ Friendly Fraud (53% of cases) - Customers falsely claim "unauthorized purchases"
2️⃣ Merchant Issues (32%) - Undelivered/defective goods
3️⃣ Policy Confusion (12%) - Users misunderstand repayment terms
4️⃣ True Fraud (3%) - Stolen payment details

Without protection, BNPL providers risk:
⚠️ Higher processing fees
⚠️ Merchant account termination
⚠️ Damaged lender reputation

5 Proven Ways to Reduce BNPL Chargebacks

1. Implement Advanced Fraud Screening

• Use AI-powered tools like Signifyd or Sift

• Require 3D Secure authentication for high-risk transactions

2. Optimize Refund Processes

• Offer 1-click refunds in your BNPL app

• Process refunds faster than the chargeback timeline (typically 30-45 days)

3. Enhance Customer Communication

• Send real-time purchase alerts via SMS/push notifications

• Clearly display refund policies at checkout

4. Partner With Trusted Merchants

• Monitor merchant chargeback ratios monthly

• Automatically block high-risk sellers

5. Leverage Chargeback Prevention Tools

• Ethoca Alerts (Mastercard)

• Verifi RDR (Visa)

How Our Ethoca & Verifi Stop BNPL Chargebacks

Feature Ethoca (Mastercard) Verifi (Visa)

Alert Speed Real-time 24-48 hours

Coverage 5,000+ banks 3,000+ banks

Best For Instant refunds Dispute resolution

Avg. Reduction 35%-75% chargebacks 30%-70% chargebacks

Case Study: After implementing Ethoca, a top BNPL provider:
➡️ Reduced chargebacks by 38% in 90 days
➡️ Saved $720,000 annually in dispute fees

3-Step Action Plan for BNPL Providers

1️⃣ Integrate Ethoca/Verifi - Connect via API
2️⃣ Train Support Teams - Resolve disputes before they escalate
3️⃣ Monitor Metrics Weekly - Track chargeback ratio

Final Thoughts

BNPL chargebacks are preventable with the right strategy. By combining:
✔ Proactive alerts (Ethoca/Verifi)
✔ AI fraud detection
✔ Clear customer communication

...you can protect revenue and build trust in your BNPL service.