Chargeback flagging is not randomly distributed across merchant categories. Industries whose transaction patterns generate elevated dispute rates at the category level produce chargeback flagged merchants at rates well above the general merchant population, and the individual merchant's operational quality has less influence on its chargeback rate than the category it operates in. Subscription billing businesses in nutraceuticals and supplements generate disputes from customers who forget their enrollment, dispute autoship charges, or find the cancellation process more difficult than expected. Online gaming and gambling platforms generate deposit disputes from players who lose money through legitimate play. Travel and timeshare companies generate cancellation and refund disputes at rates tied to the nature of the product rather than to the merchant's service quality.
For merchants in these categories, chargeback flagging is a predictable outcome of operating in the industry rather than an indicator of any specific management failure. The conventional payment processing system's response to structurally elevated chargeback rates is to enroll the merchant in a monitoring program and ultimately terminate the account if the rate does not come down, regardless of what is driving the rate. Cryptocurrency payment processing through 27 Blockchain changes the outcome because it changes the infrastructure. A charge back flagged merchant that deploys a blockchain payment gateway removes its transactions from the card-based chargeback tracking system entirely, and new transactions processed through the blockchain gateway do not contribute to the chargeback ratio that is being monitored.
