Ok I'm going to talk about paypal. The reason for this is it's really hard to get a merchant account that will accept that you are selling digital goods. So for that reason paypal is the only simple option.
My reason for posting this is there is a lot of old info about chargebacks and paypal. I thought I will share here what I have found, that way people who know more than me to point out any mistakes.
The point:
PayPal does not protect buyers OR sellers where intangible goods are involved.
What this means:
The important bit here is the fact PayPal does not protect both buyer or sellers. This means if someone tries to chargeback through PayPal for an intangible product / service you provided. You only need to tell PayPal it was for intangible goods and the case should be closed.
But as you will read people are always losing chargebacks cases where PayPal is involved. This is down to the fact that though PayPal will not protect the buyer for the intangible goods, the credit card company used to buy the product will. So the chargeback is actually from the credit card company taking the money from PayPal , then PayPal taking the money from you. In this case, it seems there is nothing you can do and just accept it.
There are many reasons a credit card company will perform a charge back. One of the big ones is stolen credit cards. Which is the one that worries me the most.
But this got me thinking that here in the UK a lot of websites use "3D Secure" which is basically an additional layer of security that means you have to enter a password each time you use your credit card. This is meant to shift the liability from the merchant to the card company.
After a little digging I found that PayPal does offer Buyer Authentication in the forms of Verified by visa and MasterCard SecureCode (Pretty much same thing as 3D secure.
Excellent! This then seriously reduces the risk of being the victim of a stolen credit card. But it will reduce sales due to a lot of people not wanting that extra step.
But what it doesn't help with is people doing chargebacks for other reasons. Such as "I didn't get the item", "it was not as described", "I'm just a bit of a dick and will just want to try and scam you".
Ok with all this in mind here are my questions:
1) PayPal will not protect you from credit card chargebacks on digital items. But does that mean you cannot try and provide evidence directly to the credit card company?
2) Is there ANY form of guaranteed evidence you can provide that someone has purchased and used a intangible good / service you have provided that would be acceptable to credit card companies. (Preferably that doesn't rely on the faxing of personal details)
