1. Understanding Chargeback Rates: Key Benchmarks

To address the problem effectively, a clear understanding of industry standards is essential:

• Standard Merchants: The ideal and safe chargeback rate should be maintained below 1% of total transactions.

• High-Risk Merchants: For sectors such as Forex, Crypto, E-gaming, Gambling, and Dating, an "acceptable" threshold is typically between 1% and 3%, depending on the acquiring bank’s policies and card network regulations (Visa/Mastercard).

2. Vietnam's Unique Market Challenges

In Vietnam, the battle against chargebacks is even more intense. Chargeback rates among high-risk merchants often range alarmingly from 1.5% to 4%, and in some cases, even higher. Key contributing factors include:

• Underdeveloped Payment Ecosystem: Both users and infrastructure are less mature compared to developed markets.

• High Fraud and Dispute Rates: Including "friendly fraud," where customers intentionally request chargebacks after receiving the service.

• User Behavior: A lack of financial product understanding, unrealistic expectations, and misuse of refund mechanisms contribute heavily.

• Infrastructure Limitations: Limited adoption of advanced fraud prevention tools like 3DS 2.0 and smart transaction routing.

3. Beyond Refunds: The Hidden and Long-Term Costs of High Chargebacks

It’s not just the refunded amount that matters. The broader consequences can be devastating and long-lasting:

Direct Costs:

• Chargeback Penalties: Merchants lose revenue and pay additional fees to acquiring banks (via PSPs).

• Rolling Reserves: A major concern. Merchants may have 10%-20% (or more) of their total revenue withheld for up to 180 days (or longer) to cover potential disputes, significantly impacting operational cash flow.

Indirect Costs – The True Business Killers:

• Merchant ID (MID) Termination: Losing your MID instantly halts your ability to process payments through that channel—causing immediate revenue loss.

• Damaged Banking Relationships: High chargeback rates and MID closures severely reduce your ability to open new merchant accounts.

• Blacklist Risk (MATCH List/VMAS): The worst-case scenario, crippling your international business capabilities and limiting card payment processing options for years.

4. Root Causes of Chargebacks in Vietnam’s High-Risk Sectors

Beyond global challenges, high-risk industries in Vietnam face unique difficulties:

• Customer Behavior: Lack of understanding of complex financial products, unrealistic service expectations, or deliberate abuse through "friendly fraud."

• Payment Infrastructure: Insufficient optimization of fraud detection layers and transaction routing.

• Merchant Operational Practices: Weak KYC processes, unclear refund policies, and delayed customer support responses.

• Legal Framework: Cross-border payment and dispute resolution regulations are still evolving.

#PaymentHot: Your Strongest Defense Against Chargebacks in Vietnam

In this environment, choosing a payment partner who understands the market dynamics and actively supports you is critical. This is where PaymentHot comes in—offering tailored solutions for Vietnam’s unique landscape:

Flexible, Performance-Based Fee Structure

• No rigid pricing. PaymentHot designs flexible fee models based on your business model, actual risk level, and most importantly, your chargeback management performance.

• Full transparency: All fee changes are discussed and notified in advance.

Smart Rolling Reserve Management

• Rolling reserve rates and holding periods are customized based on your transaction history and operational quality.

• Rolling reserves can be reduced progressively as your risk management improves.

24/7 Chargeback Monitoring and Intervention

• Real-time Transaction Monitoring: Immediate detection of suspicious activities.

• Early Warning Systems: Alerts you at the first sign of a rising chargeback trend, enabling proactive action.

• Root Cause Analysis: Detailed investigation of each chargeback to address core issues. Many PaymentHot partners have significantly reduced their chargeback rates thanks to our in-depth analytics.

More Than a PSP — A Strategic Partner

• We actively share knowledge, help merchants implement effective KYC/AML procedures, establish clear refund policies, and optimize customer support to reduce disputes from the outset.

5. Building Trust with Acquiring Banks and Merchants

• For Acquiring Banks: PaymentHot commits to maintaining a high-quality merchant portfolio with overall chargeback rates typically kept below 1%-2.5%, depending on the bank. We proactively manage fraud, strengthening our reputation across the industry.

• For Merchants: Beyond providing payment processing, we act as strategic advisors, helping you optimize payment flows, build robust risk profiles, and automate critical processes.

6. Golden Rules for High-Risk Merchants to Prevent Chargebacks

Alongside partnering with a proactive PSP like PaymentHot, merchants should:

• Implement Strong KYC and Transaction Verification: Screen customers rigorously at the onboarding stage.

• Maintain Clear and Transparent Communication: Provide comprehensive information on products, refund policies, and terms of use. Offer responsive customer support.

• Respond Quickly to Complaints: Ideally resolve customer issues within 24 hours to prevent escalations to banks.

• Continuously Monitor Disputes: Use dispute management tools to stay on top of emerging issues.

• Choose the Right PSP Partner: Work with providers that not only offer technology but also understand local markets and deploy active risk management strategies, like PaymentHot.

7. Bottom Line: Turning Risk into Sustainable Growth

High chargeback rates are not a minor issue in Vietnam—they are a survival challenge for high-risk merchants, directly impacting profitability and business viability.

However, with careful preparation, strict operational controls, and the right payment partner like PaymentHot, you can successfully manage this risk. We don't just process transactions—we help you achieve:

• Safer Transactions: With layered security and advanced monitoring.

• Proactive Protection: Thanks to early warning systems and strategic interventions.

• Sustainable Growth: Even in challenging market conditions.

Don’t let chargebacks hinder your business potential.

Contact PaymentHot today for a personalized consultation and discover a secure, high-performance payment solution tailored to your needs in the Vietnamese market!