Card Issuers Losing Money to Grey Charges

Hey merchants, yes you, BillGuard released a report that examined the grey charge problem among US debit and credit cardholders and the service costs impacting card issuers and retailers. The report revealed 11 types of deceptive ‘grey charges’ that retailers use to mislead consumers in their sales and billing practices.

Yaron Samid, founder and CEO of BillGuard stated, “Merchants profit greatly, at the expense of cardholders, when we don’t check our bills. Capitalism drives revenue optimizations and churn reduction techniques, but improper disclosure of sales and billing terms crosses a red line of ethics.”

However, while merchants seem to be profiting, they also have to waste time and money on customer service issues when handling irate callers who are duped. Looking at the entire payments ecosystem, grey charges also impact card-issuing banks, which lose millions of dollars in operating costs servicing grey charge-related calls, as well as merchants, who are crippled by fees, chargebacks, and lost business from disgruntled consumers.

To handle billing inquiries and disputes, BillGuard completely bypasses the costly and inefficient chargeback networks to connect cardholders directly to merchants for free, expedited resolution. Card issuers can and should take a number of steps to protect their cardholders. This will reduce their own servicing costs by:

• Proactively flagging and alerting cardholders to potential grey charges.
• Providing cardholders with merchant ratings related to grey charges.
• Creating a mechanism for cardholders to contact merchants directly to resolve billing disputes and inquiries; this mutually benefits the merchant, allowing them to stay in control of their customer experience.

Reductions in servicing costs are not the only benefit card issuers stand to gain from implementing these recommendations. Improved customer experience and customer loyalty would directly result from helping cardholders protect themselves against grey charges. Credit card providers could stand to increase revenue by $866 million annually just by improving the customer experience. This increased revenue would emerge through a combination of additional purchases, a reduction in customer attrition, and new customers gained through word-of-mouth recommendations.