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Chargeback management is complex.
Monitoring real-time online transactions for potential chargeback situations is impossible without using a software platform.
Chargeback prevention in real-time is why most companies outsource their chargeback process to reliable third-party software platforms like ours, ChargebackStop.
However, you may be sceptical.
So, may I ask you some quick and relevant questions?
- Do you know what your chargeback ratio is?
- What are the common reasons for chargebacks in your business?
- Do you have a process in place for quickly detecting chargebacks?
- Are you actively analysing transaction data to identify chargeback trends?
- Have you established a clear policy for handling disputes and chargebacks?
- Do you regularly review and update your chargeback management strategies?
- Are you leveraging technology to streamline your chargeback management process?
- Do you understand the regulations and requirements of different card networks?
- Do you engage with customers proactively to resolve disputes before they escalate?
- Are you utilising chargeback alerts and notifications effectively?
- Do you track and measure the effectiveness of your chargeback management efforts?
- Have you considered outsourcing your chargeback management to experts?
Let’s examine the chargeback process and see how you can profit from automated chargeback management software.
What is Chargeback Management?
As a merchant, you likely know what a chargeback is. Chargebacks cost you money, whether or not you are at fault. Preventing them is the best business strategy.
Some businesses don’t fight back against chargebacks, absorbing the lost revenue as a “cost of doing business.” This expensively flawed approach can land a merchant in hot water.
Effective chargeback management is crucial.
This is what can happen:
Your business is considered high-risk if your chargeback ratio exceeds 1% of total transactions. The cost of doing business goes up, sometimes dramatically.
Your reputation with the payment processors becomes tarnished. That’s bad news. Costs increase for every transaction. Penalties can be assessed. In extreme cases, you may pay up to $75,000 per month just in fines. This is in addition to your lost revenue and chargeback fees.
If you are in the extreme range, which can be reached by neglecting chargeback prevention and disputes, you may lose the ability to collect payments from credit and debit cards. Your business is at stake.
Having said that, let’s examine how to manage the chargeback process and achieve a good ROI.
Chargeback Management Benefits
Here are the benefits of establishing and maintaining a robust chargeback management process.
Prevention
Implement strategies to reduce the occurrence of chargebacks. (You might use CASE as a mnemonic.)
- Clear communication of policies.
- Accurate product descriptions.
- Secure transaction processes.
- Excellent customer service.
Identification
Quickly identify chargebacks as they occur. Monitor transactions and alerts 24/7 from payment processors or banks.
Analysis
Analyse transaction data, customer communication, and any other relevant information to determine the validity of the chargeback claim.
Representation
If you, the merchant, believe that the chargeback is unjustified, you can represent the case (representment) to the bank or payment processor. You can formally protest the dispute and provide evidence to overturn the chargeback.
Resolution
Work towards a resolution. You may accept the chargeback, win the dispute, or reach a settlement with the customer.
Review and Adaptation
Analyse chargeback patterns. Find ways to adapt business practices, reduce future occurrences, and improve customer satisfaction, which are crucial to maintaining a low chargeback ratio.
You must find the balance between providing excellent customer service and protecting the business from fraud and revenue loss.
Using specialised software platforms to manage and represent disputes minimises the risk of chargebacks due to unauthorised transactions.
What is Chargeback Management Software?
Chargeback management software tools typically incorporate key elements to streamline the entire chargeback process. They help improve win rates in disputes and minimise financial losses.
These elements allow businesses to manage the chargeback process more effectively, reduce the incidence of chargebacks, improve the customer experience, and ultimately protect revenue.
There are a lot of them.
Alerts and Notifications: Immediate real-time alerts for chargeback and dispute notifications.
Case Management: Centralised dashboard for managing all chargeback cases. Documentation, correspondence, and status-tracking evidence are gathered and saved.
Dispute Representation: Automated generation of evidence packets and representation documents tailored to each case and card network rules. Dispute assistants are available.
Analytics and Reporting: In-depth analytics tools to identify trends, pinpoint root causes of chargebacks, and track dispute outcomes.
Prevention Tools: Fraud screening, address verification services (AVS), and card verification value (CVV) checks.
Fraud Detection: Advanced algorithms and machine learning models detect and flag potentially fraudulent transactions and alert you of their presence.
Integration Capabilities: Easy integration with payment processors, shopping carts, and accounting software.
Custom Rules Engine: Set up custom rules for flagging transactions based on risk factors.
Regulatory Compliance: Ensures dispute-handling processes comply with relevant regulations and standards set by law, card networks, and financial institutions.
Chargeback Reason Code Analysis: Chargeback reason codes tell why chargebacks are happening and how to address the underlying issues.
Refund Management: Tools to manage refunds efficiently help avoid refund-related chargebacks.
Customer Communication: Automated communication tools to contact customers directly when a dispute arises.
Real-Time Data Access: Access to real-time transaction data to quickly assess and respond to disputes and chargeback claims.
Customisable Workflows: Match your business's unique process for handling disputes and chargebacks.
Why Outsource Chargeback Management?
After seeing all the things that can happen when chargebacks get out of control, and the many and varied things chargeback management software can do for you, the question becomes this:
“I want it. Should I build or buy?”
Why build your own complicated software when there are dedicated platforms that already accomplish what you’re trying to achieve?
ChargebackStop.com offers the following benefits and value to online merchants, particularly those scaling their enterprises.
Expertise and Experience
We specialise in this field and have a wealth of experience dealing with various types of disputes across different industries. We bring a high level of expertise that can significantly increase the chances of successfully disputing unjustified chargebacks.
Cost Efficiency
Building and maintaining an in-house team for chargeback management can be expensive. It requires investment in training, technology, and personnel. Chargebackstop is a more efficient and cost-effective solution. We eliminate overhead costs.
Resource Allocation
Managing chargebacks can be resource-intensive, diverting staff from core business activities. Chargebackstop allows you to reallocate these resources to areas directly contributing to growth and revenue, like sales, marketing, and product development.
Improved Success Rates
Chargebackstop professionals specialise in chargeback management. You can reduce your chargebacks by 99% and gain all the benefits chargeback management offers.
Access to Advanced Tools and Technology
Chargebackstop utilises advanced technologies, including AI and machine learning.
- Analyse trends
- Identify fraud
- Prevent chargebacks
Access to these tools without a significant investment can be a direct advantage.
Scalability
As your business grows, transaction volume increases. So do chargebacks. Chargebackstop provides scalability—even in extreme cases—allowing your chargeback management efforts to expand seamlessly without constantly growing an internal team.
Compliance and Regulatory Knowledge
The legal and regulatory landscape surrounding payments and disputes is constantly evolving. Chargebackstop stays on top of these changes, ensuring that your business complies with the latest regulations and avoids fines or penalties.
Focus on Customer Service
With the Chargebackstop managing prevention, your business can focus on providing exceptional customer service. Excellent customer service is crucial to fraud and chargeback protection. Great service prevents issues before they escalate to a chargeback. This proactive approach also improves customer satisfaction and retention.
Data Insights and Analytics
Chargebackstop offers detailed analytics and insights into the reasons behind chargebacks, helping you identify and address systemic issues, reduce future occurrences, and improve the overall customer experience.
Chargeback Management with ChargebackStop
Transaction alerts
Transaction alerts provide early warnings of potential fraud and chargeback situations.
Early fraud warnings occur when a cardholder makes a fraud claim but before a chargeback is activated. When fraud is detected, you can refund and cancel their subscription in seconds. A one-click refund prevents a chargeback.
Network alerts
Network alerts stop chargebacks in their tracks.
When a cardholder first raises a dispute with their issuing bank, you are notified in near real-time. You can then issue a refund for the transaction to avoid any possibility of a chargeback.
Network alerts use the underlying infrastructure of the industry-standard Ethoca and Verifi network.
Dispute Assistant
Answering a couple of pertinent questions can increase your chances of winning a dispute. Our Dispute Assistant asks you for the dispute reason and a follow-up question to get more context. That’s it. It then offers guidance on how to respond.
BIN Lookup
Are you curious about the bank that issued a particular credit card? Try our BIN Lookup. Enter the first ten digits of the card number (card number truncated for security), and click the button.
You get:
- Issuer
- Brand
- Currency
- Country
- Card type
- Card category
- Is Prepaid?
Is that handy, or what? You can also learn about the BIN and other interesting facts on the same page. It’s a great reference.
Looking Forward
Meet the future of chargeback prevention: Chargebackstop.com.
We’ve covered a lot of ground.
Do you have questions? Contact us for sales, support, or just to ask a question. We’re happy to help you on your chargeback management journey.
Visit us today for a free demo and pricing.
FAQ: Chargeback Management Software
What is the difference between a chargeback rate and a chargeback ratio?
Both terms measure the frequency of chargebacks compared to total transactions but may differ in calculation methods. The chargeback rate typically refers to the percentage of transactions resulting in chargebacks, while the chargeback ratio also considers the dollar amount of chargebacks versus sales.
What are common reasons for chargebacks?
Common reasons include unauthorised transactions, not receiving goods or services as described, technical errors during payment processing, and customer dissatisfaction.
What is chargeback fraud?
Chargeback fraud, also known as "friendly fraud," occurs when a customer makes a purchase and then requests a chargeback from the bank after receiving the goods or services, falsely claiming the transaction was unauthorised, or the product was never received.
Should I outsource my chargeback management?
Outsourcing chargeback management can be beneficial for effectively handling disputes. Third-party services, like Chargebackstop.com, bring expertise, technology, and processes to improve win rates and reduce the administrative burden.