The Card Payment Risk Most South African Merchants Have Never Been Warned About
Merchants know about the fees, they're on the bank statements, in the contracts and enough people have complained about them that the conversation has at least started. What many merchants haven't been warned about is the liability of card fees.
The Chargebacks
When a customer disputes a card transaction with their bank, a chargeback happens. The bank reverses the payment and takes the money back from the merchant. The goods or services are already gone. And the merchant now needs to prove that the transaction did actually happen. And in order to do that, the merchant needs receipts, delivery records, signed confirmation, whatever your bank requires. There's a deadline. They need to document everything, respond formally, and then wait.
Merchants frequently lose these disputes, even when the transaction was completely genuine. The reversal stands and in many cases, a dispute processing fee of R200 to over R900 per incident gets added on top of the lost revenue.
The Scale of the Problem
Chargebacks cost merchants around 0.47% of their total annual card revenue. If a merchant earns R2 million in card sales, that's R9,400 before the fees that are charged per incident. And the trend is moving against merchants.
Globally, chargeback volumes are projected to reach 324 million transactions by 2028. It's not only South Africa, the Middle East and Africa region is estimated to see chargebacks grow by 59% in the coming years. Nearly half of all chargebacks involve what's called friendly fraud; this is where a genuine customer disputes a real purchase anyway. A consumer receives goods, changes their mind, and files a dispute instead of requesting a refund. In many card systems, that process is faster and easier for the consumer than contacting the merchant directly.
The burden of proof sits entirely with the merchant because the system was designed to protect the cardholder, but nobody explains that to the merchant when they onboard.
Why Card Payments Create This Risk
When a customer pays with a card, the card network "pulls" money from their account. That pull mechanism and the associated consumer protections is what creates the chargeback pathway.
The merchant discount rate is the visible cost, whereas the chargeback exposure is the invisible one. After accounting for all fees, dispute costs, lost stock and admin time, a single chargeback can cost more than double the original transaction value.
'Card-not-present fraud' refers to online payments, phone orders, remote processing, which carries an even higher risk. This type of fraud accounts for 68% of gross fraud losses in South Africa.
What QR Payments Do Differently
QR-based payments invert the payment direction. Instead of the card network pulling money from the customer's account, the customer pushes funds directly to the merchant, meaning there's a significant architectural difference.
With TappiPay, no card credentials touch the merchant's system. Authentication happens on the customer's device via their own biometrics or PIN. There is no card data to intercept, and no mechanism for the customer to dispute a transaction that their own phone confirmed.
The chargeback pathway that exists in card payments doesn't apply in the same way. The merchant's dispute exposure is structurally reduced through better infrastructure.
The Conversation That Should Have Happened at Onboarding
The full cost of card acceptance was never explained simply. The discount rate was visible. The chargeback risk, the dispute fees, and the fraud exposure were buried in terms most small business owners never read.
Understanding the real risk profile of how you get paid isn't a technical question. It's a business one. And the answer increasingly points toward payment infrastructure that was built with the merchant's exposure in mind.
