Will My Chargebacks Increase with FlexPay?  

No, your chargebacks will not increase with FlexPay. However, it’s important to understand why this is the case, as it’s a valid concern for every merchant 

We Understand the Impact from Chargebacks 

We started FlexPay when we were merchants ourselves, trying to fix our own false decline problem. We were getting recoveries through various clever rules-based solutions we came up with, but we knew we could do so much better if we focused on the problem, and it now remains all we do. Thankfully, in developing our recovery solution, we already knew the impact a recovery would have on chargebacks  that they chargeback at the same rate as if it were approved on the first attempt. 

The Reason Why 

When you think about it, there’s a good reason why this makes sense – generally, the customer isn’t even aware that they were recovered, so it’s not like their behaviour should be different. They don’t know that the first attempt to bill them failed, and that FlexPay (or anyone else) stepped in to get them approved on the next attempt. The customer just knows they signed up for a service and are billed for it. 

Now there is one caveat to this that’s important to consider: the customers most likely to be sent to FlexPay are your newest customers. The reason is that a customer that’s only been around for two months is, on average, around nine times more likely to decline the next payment attempt than one that’s been around for two years. And, as you certainly know, a customer that’s only been around for two months is also much more likely to chargeback. So, this can mean that FlexPay’s recoveries have a chargeback rate higher than your average, but that’s only because we’re not getting your average customer – we’re getting newer customers that are more likely to chargeback. In our analyses across multiple merchants, the chargebacks on our recoveries have always been the same rate as if you had approved it yourself. 

The Value of a Recovered Customer 

As we’re going to result in chargebacks at the same rate as you would, some merchants are tempted to give up on recovery attempts and simply acquire new customers. Well, that is the wrong approach! The reason is two-fold: First, a recovered customer from FlexPay is cheaper than the cost of acquiring a new customer (by a wide margin!). Additionally, since the first two payments are (by far) the most likely to chargeback – it’s much better to recover a customer that is progressing out of that high-chargeback space than to start with a new customer. 


Contact FlexPay to see how we can help you today!