Economic downturns increase financial pressure on consumers—and for ecommerce businesses, this often leads to more chargebacks, fraud, and unstable cash flow.

For UK merchants using Shopify and WooCommerce, these challenges directly affect profitability and operational efficiency.

Fena’s Pay-by-Bank solution helps reduce these risks by removing key weaknesses found in traditional card payments.

Key Takeaways

• Chargebacks increase during economic downturns

• Card payments allow transaction reversals, creating risk

• Chargebacks include hidden operational and financial costs

• Pay-by-Bank eliminates traditional chargebacks

• Payment costs are lower compared to cards

• Some risks remain, such as refunds and customer support

• Payment mix optimization improves margins and predictability

What Is Pay-by-Bank?

Pay-by-Bank is a payment method that allows customers to pay directly from their bank account without using cards.

With Fena:

• Payments are authorized within the customer’s banking app

• No card details are required

• Transactions bypass card networks

This removes reliance on card infrastructure and reduces associated fees.

Why Do Chargebacks Increase During Economic Downturns?

When consumers face financial pressure, dispute rates tend to rise.

Common patterns include:

• More “item not received” claims

• Increased unauthorized transaction disputes

• Customers using chargebacks instead of contacting support

This leads to higher costs and increased workload for businesses.

Why Card Payments Create Risk

Card payments are reversible, which introduces structural risk.

Key issues include:

• Payments can be reversed weeks after purchase

• Merchants must prove transactions are valid

• Dispute deadlines are strict

• Friendly fraud becomes easier

This creates uncertainty in revenue and cash flow.

The True Cost of a Chargeback

Chargebacks go beyond just losing the transaction.

Costs include:

• Lost revenue

• Lost goods or services

• Chargeback fees

• Time spent managing disputes

• Increased processing costs over time

Even a small increase in disputes can significantly impact profits.

How Fena Helps Reduce Chargebacks

Many businesses try to reduce chargebacks through better processes, but these don’t address the core issue.

The root cause is card reversibility.

With Fena Pay-by-Bank:

• No card networks are involved

• No chargeback mechanism exists

• No dispute workflows are required

This removes the problem at its source.

Does Pay-by-Bank Eliminate Chargebacks?

Yes. Pay-by-Bank removes traditional chargebacks entirely.

Because payments are:

• Authorized directly through banks

• Not processed via card networks

This means:

• No chargeback fees

• No disputes

• No monitoring programs

Is Pay-by-Bank Cheaper Than Cards?

In most cases, yes.

Benefits include:

• No interchange fees

• No scheme fees

• Fewer intermediaries

This results in lower overall payment costs.

What Changes When Using Fena?

With card payments:

• Transactions are reversible

• Chargebacks are possible

• Fraud risk is higher

With Fena Pay-by-Bank:

• Payments are bank-authenticated

• No chargebacks

• Reduced fraud risk

• Simpler operations

What Disappears vs What Remains

What disappears:

• Chargebacks

• Card dispute fees

• Dispute workflows

What remains:

• Refunds

• Customer support

• Certain fraud risks

How Pay-by-Bank Affects Fraud

Pay-by-Bank reduces fraud by requiring secure bank authentication.

This means:

• Stolen card details become ineffective

• Unauthorized fraud decreases

However:

• Some scam-based risks still exist

When Pay-by-Bank May Not Be Ideal

In some cases:

• Subscription models may require adjustments

• Some customers prefer cards

• Refund processes differ slightly

These are usually manageable trade-offs.

When Pay-by-Bank Makes the Most Sense

Best suited for:

• Businesses with high chargeback rates

• Merchants with high processing costs

• Fraud-prone industries

How to Implement Pay-by-Bank with Fena

Implementation is simple:

• Add Pay-by-Bank at checkout

• Redirect users to their banking app

• Receive instant confirmation

Conclusion

Reducing payment risk and costs is critical for ecommerce businesses.

Fena’s Pay-by-Bank solution:

• Eliminates chargebacks

• Reduces fraud exposure

• Lowers payment costs

• Improves cash flow predictability

It provides a more stable and efficient alternative to traditional card payments.

FAQ

What is Pay-by-Bank?

A payment method that allows customers to pay directly from their bank account without using cards.

Why do chargebacks happen?

Because card payments allow transactions to be reversed through banks.

Does Pay-by-Bank eliminate chargebacks?

Yes, it removes traditional card-based chargebacks.

Is Pay-by-Bank cheaper?

Yes, it reduces costs by removing card-related fees.

Is Pay-by-Bank safe?

Yes, it uses secure bank authentication systems.

What’s the difference between fraud and chargebacks?

Fraud is unauthorized activity, while chargebacks are disputes initiated by customers.

Is Pay-by-Bank worth it?

Yes, especially for businesses looking to reduce costs and payment risk.