The Clearsale Blog

Is the Square Chargeback Protection Helpful for Merchants?

Is the Square Chargeback Protection Helpful for Merchants?

For e-commerce merchants, finding the right credit card payment processor can be challenging.

Square’s appeal – convenience, fast payments, low fees and ease of use – has quickly made it a popular option. But when it comes to e-commerce fraud, how does Square’s chargeback protection measure up?

While Square promises chargeback protection and dispute assistance to its business users, many merchants might be surprised to learn the services aren’t always as comprehensive as they seem.

How Square Prevents and Resolves Disputes

Merchants will always prefer to catch fraud before it happens. But if fraud should occur and a customer files a transaction dispute, merchants want a team of specialists that can help guide them through the process. Here’s how Square addresses both concerns.

Flagging Fraud Before It Happens

To prevent suspicious transactions from getting through and defrauding a merchant, Square takes a proactive approach to fraud that includes:

  • Monitoring merchants’ shop activity to identify suspicious transactions.
  • Using a combination of machine learning, human expertise, and Square’s extensive database of transactions to identify and flag emerging fraud strategies
  • Notifying clients immediately of any unusual patterns or transactions

Covering Eligible Transactions

Square’s chargeback protection program offers merchants protection on up to $250 in eligible sales each month. Square will also waive chargeback fees and cover the costs of eligible chargebacks at no cost to the merchant — with a few conditions, of course.

  1. The items/services in question are eligible for protection.
  2. The merchant complies with Square’s best practices for accepting payments.
  3. The merchant promptly submits all necessary and requested supporting documentation to address the buyer’s claim.
    Note: To be considered eligible for coverage, merchants must complete the Information request form within seven days of the date requested.
  4. The total of all items/services is less than $250.

Fighting Fraud on a Business’s Behalf

Square works with the customer’s bank during a dispute, managing the potentially time-consuming and stressful process of chargeback resolution and taking that off the merchant’s plate. But that doesn’t mean that merchants don’t know what’s going on every step of the way.

Through the merchant’s Dispute Dashboard, Square lets merchants know exactly what documentation merchants must submit to increase their chances of a successful and the status of each dispute. These services are provided free to the merchant as part of the Square chargeback protection program.

The Downsides of Square Chargeback Protection

Although the chargeback protections Square has been providing since 2015 has been valuable to merchants, it’s not without its downfalls. Here’s what merchants are most concerned about.

They Cover Only a Low Total

Square covers chargeback costs for up to $250 in eligible sales monthly, which is great for merchants selling low-cost, low-risk merchandise. But for merchants selling more expensive products and services, Square offers less protection. For example, merchants selling their graphic design services for $125 an hour would lose their monthly coverage after only two chargebacks.

It’s even worse for merchants with big-ticket sales, because Square provides coverage on only transactions of less than $250, which means that merchants receiving a single chargeback on an item costing $251 find themselves without coverage at all.

Not All Items Are Covered

Not every product and service is covered. Square currently exempts some high-risk products — including electronics, collectibles and art — from the chargeback policy.

They’re Not Chargeback Experts

While merchants are happy to have someone in their corner to help mediate disputes, Square is in the payment processing, not the representing, business. That means they may not be able to guide merchants to successful resolutions and may not always be as thorough as the merchant or an outsourced solution would be in their approach.

Prevent Square Disputes with a Fraud Protection Solution

Even with the free Square chargeback protections in a merchant’s corner, winning chargebacks isn’t easy. Successful representment requires research, staffing and meticulous record-keeping. Most smaller businesses — Square included —just may not have the manpower or resources to accomplish this.

But just accepting chargebacks and hoping they don’t happen too often isn’t a great strategy, either. Ignoring chargebacks is tantamount to an admission of guilt in the banks’ eyes, and the fees and expenses can quickly add up, preventing businesses from reaching their full potential.

Whether merchants are using Stripe, PayPal, Visa, Mastercard or another payment alternative, preventing and defending against chargebacks shouldn’t have to take all their efforts. Download our free “Fraud Protection Buyer’s Guide” to learn about the options available to you for protecting your business and your customers against savvy fraudsters and expensive chargebacks.

ClearSale Fraud Protection Buyers Guide

You may also like

Is Your Chargeback Rate Accurate?

Is Your Chargeback Rate Accurate?

Reviewing your KPIs, you notice your chargeback rate looks low — just as you want it to. It’s staying well under that 1% threshold that would put you in danger of needing a high-risk merchant..

Have Chargeback Disputes Become Too Easy?

Have Chargeback Disputes Become Too Easy?

Online shopping is getting easier by the minute. Almost too easy. Customers can make purchases with a single click — and they can often return them with not much more effort. This convenience..

Evidence You’ll Need to Dispute a Chargeback

Evidence You’ll Need to Dispute a Chargeback

No merchant wants to see a chargeback dispute land in their laps, and with good reason. Not only are they expensive to fight (fees alone can top $75), but card networks tend to rule in the..

[Trend Alert] Gen Z Shoppers Want Alternate Payment Methods

[Trend Alert] Gen Z Shoppers Want Alternate Payment Methods

If your online store targets Generation Z – today’s young consumers, born between 1995 and 2015 – you need to be catering to a tech-savvy, digital native audience.

EU regulations might help, not hinder, digital payment fraud

EU regulations might help, not hinder, digital payment fraud

We live in a time of great convenience for many customers and businesses: according to PWC, a possible 20 per cent of online transactions in the UK took place on mobile devices in 2018. But while..

How to Keep Your Online Store's Rewards Program Secure

How to Keep Your Online Store's Rewards Program Secure

Fraudsters who attack e-commerce merchants aren't always focusing their nefarious efforts where you might think. Instead of trying to steal products or services, sometimes they're seeking access..

The California Consumer Protection Act: What E-Commerce Merchants Need to Know

The California Consumer Protection Act: What E-Commerce Merchants Need to Know

The California Consumer Protection Act (CCPA) will go into effect January 1, 2020. If your business collects, purchases, or uses the personal data of California residents in any way, the CCPA will..

How to Avoid Travel Industry Chargebacks

How to Avoid Travel Industry Chargebacks

The U.S. travel market was forecast to top $370 billion by the end of 2018 — representing a 5% growth over 2017. Disposable income, developing markets and increased curiosity are just three of the..

What Is the Visa Chargeback Monitoring Program?

What Is the Visa Chargeback Monitoring Program?

No e-commerce merchant wants to find themselves on the receiving end of chargebacks. They’re expensive, they’re time-consuming, and they can damage online reputations. Now, Visa has thrown a new..

Want to write
for our blog?

Please review our writers' guidelines
https://www2.clear.sale/press/clearsale-guest-blog-guidelines
and then email guestwriter@clear.sale with your pitch!

Subscribe to our blog