Running a server can be really rewarding but chargebacks are an unavoidable part of running any business. Handling them successfully can make a very real difference to the success of your business - we’ve collected some of the best advice from gateways and server owners as well as adding in some of our own tips for limiting how chargebacks affect you.
What is a chargeback?
Chargebacks were originally designed as a mechanism to allow customers protection against fraudulent payments. This may have been if their card was used to make an unauthorised transaction, or a purchase that was made was not as described when received. Originally set up by the big credit card companies (Visa, MasterCard and AmEx), many other payment gateways have introduced similar mechanisms (such as payment disputes). They are initiated by the customers' bank or payment gateway after the customer reports an issue with a payment.
Why do they happen for Minecraft servers?
In its correct usage, a chargeback would normally be initiated as the result of an item not being delivered to the player, the wrong item being given or a payment being fraudulent (unauthorised or unrecognised by the owner of the payment method).
Unfortunately, chargebacks are also frequently misused in the gaming industry if a player has a dispute with the server, for example being banned for a breach of the servers rules, or more generally if they've changed their mind and have buyer's remorse.
What happens if I get too many?
The most immediate impact is that you will usually be charged for each chargeback received (this is different for each gateway) and will also have to refund the payment in full.
Longer term there are substantial impacts to being the target of a large number of chargebacks. Many gateways will assess higher processing fees to merchants they deem 'high risk' and some gateways will refuse to provide payment processing services altogether. In order to ensure your business is able to run as smoothly as possible, it’s really important to keep them as low as possible.
Preventing chargebacks
There are ways to reduce the number of chargebacks initiated against you. While it's impossible to prevent all chargeback claims (especially claims raised fraudulently by the customer), our tips will help keep them to a minimum.
A clear refund policy
Often overlooked by new servers, a top tip from PayPal’s guide on chargebacks is to make sure that your refunds policy is really clear in your terms and conditions.
You can always make your terms and conditions more visible to your players by adding them to a CMS page on your store, allowing players to read and understand them even before they visit your checkout page.
In some cases where the payment might only have been for around $5, it can even save you money if you refund the player instead of going through the chargeback or disputes process depending on the gateway's fees, which are normally around the $20 mark. You can check out our breakdown at the bottom of this post!
Provide a public support method
Another great tip is to make sure that you provide a public support channel where you are active like a support email, forums or Discord.
Having a contact method available where you are active means that players with payment issues are more likely to get in touch with you directly rather than defaulting to chargeback straight away.
Be on the lookout for fraudulent payments
While some chargebacks are legitimate, there are also problems with players whose choose to make fraudulent payments. However, there are a few things that you can use to identify and prevent fraudulent payments which might happen on your store.
Things to look out for:
- Large payments - multiple your most expensive packages or a big donation
- A lot of payments from a single IP or username in a short period of time
- Multiple purchases of the same item
- Payments from players who haven't even logged into your server
If you want to help prevent some of these problems on your store there are a few options you can use in Buycraft:
- Spending Limit - You can use this to set a limit for the amount of money a player can spend on your store per hour, day, week etc
- Geo-IP Address Verification - This will stop players from being able to purchase if their IP returns a different country than their address. This will only work if you have the Require Billing Details option turned on in “Settings > Webstore”!
- Player Checks - This makes use of server data to prevent or restrict access to your store from players who do not actively participate on your server.
Buycraft fraud prevention settings
We've dedicated time and effort to building features which can help you cut down massively on the number of malicious chargebacks. One of our biggest features is our a global ban system, using data from across the whole network to provide username and IP blocking based on a risk rating for players with a history of chargebacks.
This works by using the player’s IP, username or UUID to calculate a risk rating based on its global purchase history across all Buycraft stores. You can then set the threshold of risk which you would like to allow to purchase on your store.
This means that you can take advantage of the data from the millions of payments we have processed over the past 5 years, it really is the best fraud prevention system in the game!
You can find all the additional settings and options for our fraud features including, local chargeback bans on your store, how to deal with pending commands and whitelisting options in our Fraud settings.
Disputes
If the gateway you use has a dispute system before being escalated to a chargeback (PayPal is one such gateway), then you get a chance to resolve the problem with the player before receiving a chargeback.
Refunds in this situation can save you from paying the chargeback fees and also save your relations both with the player who may purchase again in future and the gateway who will not have that 'strike' against you, so it can be worth spending the time to resolve them.
If things don't go to plan then you will need to put forward evidence that you have provided the items to fight the chargeback claim.
You may want to contact the payment gateway to ask them what information they’ll need to help resolve the dispute, but here are some examples of what they might ask you to provide:
- Your terms and conditions
- Proof that the player was made aware of your refund policy
- Proof that what they purchased was as described
Communication is the key here and can mean the difference between winning a dispute or having to pay the fees.
Gateways and fees
Different gateways have different ways of handling the dispute or chargeback process with some handling the process themselves and some self-service, some with fees and some with no fees.
Xsolla - No chargeback fees
Xsolla have a specialised team that handle chargebacks for you and will refund your customers so that they don’t have to chargeback.
PayPal (Standard and Express)- $20
PayPal has a disputes process which you can handle in your resolution centre on your account and charges a fee for processing a chargeback.
paysafecard - No fees
As each paysafecard is purchased in person at an outlet so you can't be affected by chargebacks. Using this method will avoid the issues of chargebacks altogether.
PayGol - Variable fees
PayGol doesn’t currently publish their fees for chargebacks but if you do receive a chargeback then fees will be paid out of your balance.
Mollie - €19 ex. VAT
Mollie will contact you as soon as you receive a chargeback where you will have 45 days to send back evidence to stop the reversal.
Stripe - $15
Stripe supports a disputes system which will return the refunded payment to your balance if found in your favour.
Braintree - Variable pricing
Braintree offers a disputes process where you can provide evidence against the chargeback or accept it. The fees for chargebacks will depend on your merchant account type.
G2A Pay - Variable pricing
G2A Pay will cover the cost of chargebacks for you unless you go over their limit for the number of chargebacks on their account. Their pricing for fee’s at this point is not documented publically.
Skrill - €25
Skrill has a disputes process where they will notify you and allow you to submit evidence against the claim before the full chargeback goes through.
2Checkout - $20 (US sellers) $25 (non-US sellers)
With 2Checkout you can challenge a chargeback by emailing their disputes department with the details of your challenge.
CashU - No chargebacks
As this method is a prepaid card they do not support chargebacks on their gateway.
Paymentwall - $25
Paymentwall will hold 5% of your revenue to cover chargeback costs and if no chargebacks occur they will then payout the full amount.
References:
- PayPal - Avoiding disputes and chargebacks: https://www.paypal.com/uk/webapps/mpp/avoid-disputes-chargebacks
- PayPal - Resolving disputes, claims, and chargebacks: https://www.paypal.com/uk/webapps/mpp/resolve-disputes-chargebacks
- PayPal - Avoiding Fraud: https://www.paypal.com/uk/webapps/mpp/avoid-fraud
- Xsolla - The Changing State of Chargebacks in the Game Industry: http://origin-blog.xsolla.com/2014/06/20/the-changing-state-of-chargebacks-in-the-game-industry
- Stripe: https://stripe.com/docs/disputes
- Cashu: https://www.cashu.com/site/en/merchants
- G2A Pay - https://pay.g2a.com/downloads/G2APay-Merchant-Terms-and-conditions.pdf
- Braintree: https://articles.braintreepayments.com/risk-and-security/chargebacks-retrievals/overview
- Mollie: https://help.mollie.com/hc/en-us/articles/213317329-I-have-received-a-chargeback-for-credit-card-what-now-
- PayGol: https://faq.paygol.com/en/earnings-payouts/
- Skrill: https://www.skrill.com/en/footer/terms-conditions/skrillaccounttermsofuse/
- 2Checkout: http://help.2checkout.com/articles/FAQ/What-are-the-Chargeback-fees/
- Paymentwall: https://www.paymentwall.com/en/pricing
- Paysafecard: https://www.paysafecard.com/en/corporate/blog/detail/paysafecard-makes-customer-surcharges-available-to-online-retailers/
