How do chargebacks typically impact merchants?

Chargebacks typically impact merchants by increasing their operational costs. When a chargeback occurs, the merchant incurs several related expenses, including administrative overhead for handling the dispute, potential fees imposed by the payment processors or banks, costs associated with reversing the transaction, and the requirement to maintain additional documentation or evidence to support their case. These added expenses can strain a merchant's financial resources, especially if chargebacks become a frequent occurrence.

In addition to direct costs, high chargeback rates can lead to long-term financial impacts, such as increased transaction fees due to a higher perceived risk by the payment processor. Thus, it is important for merchants to manage chargebacks effectively to keep operational costs in check and maintain a healthy business environment.