Crypto Exchange Chargebacks: All the Best Hacks That No One is Talking About

For purposes of clarity, a crypto exchange is a platform that enables you to buy and sell cryptocurrency.

Via cryptobeurzen kun je eenvoudig de ene cryptovaluta omwisselen voor een andere, of cryptovaluta kopen met een reguliere valuta zoals de Amerikaanse dollar. Ook kun je er je cryptovaluta omzetten in traditionele valuta.

Volgens de branchenormen kun je geen cryptovaluta kopen bij een bank of beleggingsonderneming. Je moet een account aanmaken op een handelsplatform voor cryptovaluta om je fiatgeld in te wisselen voor de digitale activa van je keuze.

Beursplatforms zoals Coinbase zijn het toonbeeld van het cryptotijdperk. Er zijn echter nieuwe spelers op het toneel verschenen in de strijd om digitale activa. Platforms zoals PayPal bieden gebruikers sinds kort de mogelijkheid om binnen hun bestaande accounts in cryptovaluta te handelen.

Although there's been a significant uptick in crypto exchanges as public interest in cryptocurrencies grows, crypto exchange platforms still face enormous challenges. And chief among those hurdles is chargebacks.

Below we explore how you can navigate crypto exchange chargebacks effectively.

Crypto exchange chargebacks are unprecedented

Digital goods are known to have a relatively high volume of chargebacks. But the rate of chargebacks on cryptocurrency exchanges supersedes that of any other high-risk eCommerce vertical by several margins. Other regulated high-risk verticals face similar acquirer scarcity; an igaming payment service provider, for example, deals with comparable underwriting hurdles.

As an exchange or payments services provider serving a crypto exchange, knowing the root causes of the unusually high rate of crypto exchanges chargeback is critical.

Laten we die zorg dan maar eens wat nader bekijken, oké?

For starters, crypto exchanges must receive payments securely and timely - without much support from acquirers. Due to stringent payment protocols by the card network, exchanges can only work with a handful of acquirers. Most acquirers disallow that vertical straight out. And acquirers who do business with exchanges do so independently; they could lose their operating licenses at any time. This scarcity of willing acquirers is why many exchanges end up working with a dedicated high risk payment service provider instead of a mainstream bank.

That creates opportunities for payment fraud. A fraudster can use a stolen credit card number to purchase crypto, resulting in a higher volume of chargebacks. ​​

But that's one minor headache for exchanges. Next to unauthorized transactions is the issue of deceitful claims. In this case, the customer bought crypto, which incidentally loses value against the dollar (or other fiat currency). The consumer then abuses the chargeback process by attempting to secure a refund.

However, the absolute bane for which crypto exchange chargeback is extremely unprecedented is that immediately a cardholder finalizes a transaction to secure crypto, the cardholder can use the crypto to make additional unacceptable transactions.

Right now, laws regarding crypto transactions give little purview of how one can seek remediation when a merchant fails to deliver on their end of a transaction bargain. The immediate course of action in the case of transaction disputes is to file a chargeback request against the exchange with their issuer or bank. And as you'd guess, that is problematic because if the said bank or issuer does not understand the disputed transactions' circumstances, they'll grant the chargeback automatically.

Daarom raden wij beurzen aan om grondig onderzoek te doen en samen te werken met acquirers die uit eerste hand inzicht hebben in de specifieke kenmerken van de crypto-industrie en weten hoe geschillen rond cryptotransacties moeten worden beslecht.

Apart from the fact that exchanges don't receive any lifeline when criminals are involved, and the cardholders request a chargeback, a high volume of chargebacks stunts the growth of an exchange platform. For one, mitigating chargebacks is exhausting, and two, fines imposed by the card networks for excessive chargebacks can have a detrimental financial impact on your balance sheet.

Hoe u uw cryptobeurs kunt beschermen tegen terugboekingsfraude

Notably, protecting your crypto exchange from chargebacks centers on being able to verify that the person marking the transaction is the rightful owner of the card, ensuring that your payment processing methods aren't letting you down, and using data to level up.

De volgende drie eenvoudige tips kunnen helpen om dat doel te bereiken.‍

1. Werk aan je methoden voor identiteitscontrole

One key strategy crypto exchanges can use to limit chargebacks is being thorough with their onboarding processes. If you give the wrong user access to your platform, you'll inadvertently open your platform up to fraudulent chargebacks.

The problem is, the very nature of the crypto framework means anonymity and decentralization are the first principles. That makes getting personal data from users a considerable challenge. Plus, if your users perceive your platform as having too many onboarding hurdles, they'll probably go to your competitors.

Beurzen zoals Coinbase proberen die uitdaging te omzeilen door hun aanmeldingsproces eenvoudig te houden, maar tegelijkertijd verschillende protocollen in te voeren, zoals identiteitscontrole en authenticatieprocedures, wanneer gebruikers munten willen kopen of opnemen.‍

2. Onderzoek naar alternatieve systemen voor betalingsverwerking

Sommige beurzen werken samen met externe aanbieders voor het omzetten van fiatgeld in cryptovaluta. Dit leidt echter tot problemen vanwege de juridische grijze zones rond betalingsverwerking in de crypto-industrie.

Analisten hebben erop gewezen dat het voor beurzen een eenvoudigere optie zou zijn om betalingen via bankoverschrijving te accepteren. Bankoverschrijvingen kunnen soms worden teruggedraaid en zijn goedkoper te verwerken dan kaartbetalingen. Dit is des te belangrijker voor beurzen die grensoverschrijdende betalingen afwikkelen, waarbij valutaconversie en de doorlooptijd van internationale overschrijvingen extra risico’s met zich meebrengen bij de afstemming van de boekhouding.

What you need to know about using a bank transfer, though, is that the constant changes in crypto price could pose a challenge to your users if reconciliations are not immediate, as bank transactions often take days.

Welke optie voor u ook het meest geschikt is, we raden u aan om even de tijd te nemen om de voor- en nadelen af te wegen en te bekijken hoe deze voor uw gebruikers uitpakken – met name wat betreft privacy, de tijd die nodig is voor de afstemming en de kosten.

3. Maak gebruik van automatisering van terugboekingen om een stap verder te gaan

Alles wijst erop dat de belangstelling voor cryptovaluta’s zal blijven toenemen. In die zin zullen beurzen het toneel blijven vormen voor het grootste deel van de activiteit, waardoor het tegengaan van chargeback-fraude voor deze platforms van cruciaal belang is.

Applying the above hacks is the start in mitigating crypto exchange chargebacks. A step further would be to use data to your advantage. In that sense, you want to ensure that when a consumer files a chargeback, instead of scratching your head on what to do, you can quickly pull from over 50 data points and build a case that gives you up to a 50% chance of winning the dispute.

And Chargeflow does that and much more. By leveraging big data, Artificial Intelligence, and human insights, our systems are constantly improving while being supervised by chargeback experts 24/7. Our framework gives exchanges complete dispute and chargeback automation - from receiving the chargeback until you win it. No extra work from you is needed. We integrate with the major eCommerce platforms and payment processors, and if your vendors are using them, we can automate your chargebacks and disputes.

Join 500+ merchants in our early access program to stay on top of your disputes and chargebacks from every connected payment processor in a single dashboard.