What are chargeback prevention alerts?
Chargeback prevention alerts let business owners know when a customer has initiated a dispute. These alerts allow merchants to proactively address the issue by either issuing a refund before the dispute becomes a chargeback, cancelling the order if it hasn’t already been shipped, reaching out to the customer directly, or by spotting patterns that indicate fraudulent activity.
What is the difference between a chargeback alert and a chargeback notification?
A chargeback alert is different from a chargeback notification. A chargeback notification comes from the bank and lets the merchant know that they’re already facing a chargeback. Merchants need a representment package to address this, which costs time and money. On the other hand, chargeback alerts ping merchants before a customer dispute turns into an official chargeback, giving merchants the chance to either contact the customer or issue a refund.
Do you need chargeback alerts?
Chargebacks have become overwhelming for merchants. They’re expected to reach an estimated 337 million by 2026, and merchants are struggling to keep up. That said, merchants win most of the chargebacks that they dispute. In 2023, merchants responded to 53 percent of incoming chargebacks and about 45% of them. The trouble is that responding to chargebacks before the chargeback time limit is difficult.
Responding to a chargeback takes a lot of work for merchants. They need to gather the necessary evidence (e.g., proof of delivery, proof that a customer accepted terms of service, user logs), put together a concise but compelling representment package, and submit all of this before time runs out. And this is if they even know that the customer has filed a dispute to begin with.
Chargeback alerts give you a heads up that there’s a dispute. This gives you the time to prepare a response. Depending on which chargeback management solution you use, there are also tools that can help you prepare the most compelling representment package, automatically gather evidence, and alert you to any missing documentation. Chargebacks cost U.S. merchants an estimated $243.75 billion in 2023. It pays to put money into prevention.
Signs that you need a chargeback management solution include:
- Having a high chargeback rate: Chargeback rates are a metric used by payment networks to determine what percentage of your monthly transactions are chargebacks. A healthy chargeback rate is around 0.5%. If your rate surpasses this, it’s time to consider a chargeback management solution in order to avoid being penalized by your payment network.
- Working in a high-risk industry: Certain industries are more susceptible to chargebacks and fraud, such as the hospitality industry, the retail industry, and the education industry.
- Struggling to keep up with transaction volume: Missing out on chargebacks you could have won or refunds you would have issued before they became chargebacks because you can’t keep up with the volume.
What are the different chargeback alert types?
Chargeback alerts are offered by service providers who have been verified by the payment networks. When the customer contacts their bank to dispute a transaction, the issuer (the bank that gave the customer the card) sends an alert to the service provider. The chargeback management provider then sends a notification to the merchant who can choose whether to dispute, refund, stop fulfillment, or reach out to the customer directly.
There are a few providers to choose from.
Ethoca Alerts
Ethoca, a Mastercard company, offers Ethoca Alerts. This service shares fraud and dispute data in near-real-time This helps both the merchant and the issuing bank, since the bank has fewer chargebacks to process.
Verifi RDR
Verifi, a Visa company, offers Rapid Dispute Resolution, also known as RDR, a fully-automated dispute resolution solution. It also gives merchants the option to define their own logic-driven rules to assess whether a refund should be automatically issued, minimizing the time business owners spend on reviewing disputes.
Verfi CDRN
Verifi also offers the Cardholder Dispute Resolution Network (CDRN). CDRN calls for manual intervention while the RDR is an automated solution. Customers that use the CDRN receive an alert in the Verifi | One portal where disputes are paused for 72 hours. During this time, merchants can manually review the dispute and decide whether they want to issue a refund, counter the dispute, or cancel order fulfillment.
How ChargebackStop supports chargeback prevention alerts
ChargebackStop offers a full chargeback management platform that helps customers not only resolve their disputes, but save their money and grow their business confidently in the process.
Integrations
ChargebackStop works with any payment processor, and we’ve built integrations with several of these processors in order to deliver a more enhanced experience.
Image: ChargebackStop’s support of payment processors as well as processor-specific integrations
Automation
ChargebackStop users that are integrated with a supported provider receive a fully-managed, hands-off pre-chargeback alert experience. Our chargeback prevention solution matches every alert with the underlying transaction and it automatically sends a credit to the merchant for any duplicate or invalid alerts. We use this by monitoring Acquirer Reference Numbers (ARN), card numbers, authentication codes, transaction amounts, and more.
Multi-merchant support
If you have multiple merchant accounts, you can opt to have all of your dispute activity displayed within one dashboard.
Volume Pricing
ChargebackStop’s pricing goes down as the volume of managed transactions increases. There are no lock-ins, meaning you can cancel at any time. A business’ specific pricing depends on their industry and the number of transactions they process.
Chargeback management is a volume game, and there are tools to avoid getting swamped
Managing chargebacks is all about keeping pace with the number of payments. An automated solution can help business owners keep more of their money, respond to disputes more easily, and scale their business without worrying about fraud rates keeping pace with their growth.
You can book a call with a member of the ChargebackStop team here to learn more.
