What type of transactions pose a risk due to long chargeback periods?

Future delivery transactions pose a particular risk because they involve a delay between the purchase and the delivery of the product or service. During this waiting period, consumers may find reasons to dispute the charge, leading to chargebacks. The longer the timeframe between the transaction and the fulfillment of the order, the greater the chance that an issue could arise that prompts the customer to initiate a chargeback.

For instance, if a customer purchases tickets for an event several months in advance, and something goes wrong—like a cancellation or change in the event—there is a likelihood that they will seek a refund. The business might be at risk of financial loss if the chargeback process takes longer, and they might not have the necessary evidence to effectively dispute the chargeback after such a significant delay.

Immediate delivery transactions do not carry the same chargeback risk, as the customer receives the product or service without delay, generally minimizing the opportunity for disputes. Refund transactions might involve chargebacks, but they usually stem from specific return and satisfaction policies rather than a built-in risk due to delivery timing. Low-value transactions typically attract less scrutiny and are less likely to be disputed, reducing the potential chargeback risk.