chuladi - 6:32 am on Jul 8, 2004 (gmt 0)

How does PayPal compare with merchant accounts with regards to chargebacks?

My chargeback rate is exceptionally low. I can say, without question, that I have lost EVERY SINGLE paypal CHARGEBACK (buyer protection claims are different), regardless of the claim or my part in it. I can say, without question, that I have only lost ONE credit card chargeback and that was because that was COMPLETELY my fault.

It is my belief that paypal does not fight chargebacks on behalf of the merchant. Even though people tell you that without a signature, you automatically lose, that is not true as I can testify to winning all but one credit card chargeback.

therefore, I am firmly of the position that with paypal, you can only hope that the chargeback rate is low because you will not win a chargeback.

And, in case you are wondering, the defenses to all chargebacks were similar. And the documentation was similar. HOWEVER, paypal does not allow for such detailed responses as a merchant account does and even if they do, I have my sincere doubts about how that is presented to the merchant bank.

With the normal chargeback process

Customer files complaint with issuer-->issuer sends paperwork to merchant's bank--> merchant bank sends paperwork to merchant-->merchant replies to merchant bank--> merchant bank either accepts or rejects chargeback and notifies cardholder's issuing bank.

With paypal, WHO KNOWS what they do or how they present the paperwork to the merchant bank. I have paypal chargebacks that I KNOW I would have won if they were with a credit card. Even unrecognized charge chargebacks did not get reversed with emails/faxes from the customer saying that they did recognize the charge. I DEFINITELY would have won that with my merchant account.

And that is my experience.