Why are chargebacks such a big concern for payment processors?

Card processors designate certain industries as "high risk" and/or will ban individual businesses because of chargeback rates over a certain threshold (typically ~1%). Adult content businesses, attorneys and even furniture stores for example have a high chargeback rate that makes it difficult for them to find processors that will work with them.

Why are chargebacks such a big concern for the processors, given that the merchant is the one on the hook for chargebacks and associated fees? I understand why they would require an account minimum reserve, but don't understand why processors would want to completely exclude merchants with chargeback rates higher than the 1% threshold if the risk of those chargebacks is borne fully by the merchant. Stripe already has a minimum period before being able to withdraw funds, so why don't they and other major processors simply implement an account reserve requirement for businesses that go beyond a certain chargeback percentage?

submitted by /u/robinfranc
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