Stop Disputes & Fight Friendly Fraud With A More Effective Chargeback Solution
Chargebacks cost merchants close to $150 billion every year. That’s right: billions of dollars are lost trying to navigate the chargeback process. And, no matter the amount of effort merchants put in, the process never seems to get easier.
But, then again, you already know that. After all, that’s why you’re looking for a chargeback solution.
In this article, we're going to talk about some basic approaches you can take to managing chargebacks. We'll look at the solutions available, and reveal the key questions you should ask when evaluating any chargeback management option.
Recommended reading
- Chargeback Ratio: 8 Important Things to Know in 2024
- Prevent Double Refund Chargebacks & Unnecessary Losses
- What’s an “Acceptable” Chargeback Rate? Why Does it Matter?
- How to Find the Right Chargeback Management System
- Do Chargeback Bans Actually Help Stop Disputes?
- What is a Chargeback Analyst? Do You Need to Hire One?
What Should a Chargeback Solution Help You Accomplish?
The best chargeback solution is the one that most effectively addresses your unique needs as a merchant. The best approach won’t be a “one size fits all” answer. That said, all effective solutions for chargebacks should accomplish a few key objectives:
#1 | Identify the Sources of Your Chargebacks
Every chargeback you receive will be attached to a chargeback reason code. However, reason codes are not reliable indicators, as three out of four chargebacks are suspected cases of first-party chargeback misuse.
You can break all chargebacks down into three main categories: merchant error, third-party fraud, or first-party fraud.
If you don’t know the sources of your chargebacks, you’re basically fighting blind. With the benefit of this insight, though, you can develop a much more resilient strategy tailored to your unique needs.
#2 | Stop Chargebacks From Happening
A chargeback solution must demonstrate measurable outcomes. The best (and most obvious) barometer of whether a chargeback solution is successful is whether it reduces the number of chargebacks filed against you. This can be measured by comparing your chargeback rate — the percentage of completed transactions that result in chargebacks — before and after adopting a strategy.
Once you’ve pinpointed the sources of your chargebacks, you can develop a strategy to see an immediate reduction in chargeback issuances. This can include tools like chargeback alerts and fraud scoring, as well as practices like optimizing customer service and billing descriptors.
Chargebacks911® offers the industry’s widest alerts coverage. You’ll never be caught off guard by another chargeback again. Click here and get started today
#3 | Reduce Your Long-Term Chargeback Risk
A good chargeback solution is proactive, not reactive. That means that your chargeback solution should help you identify and quash chargeback risk factors before chargebacks get filed.
For example, it’s considered a best practice to require buyers to input card verification values, or CVVs, when entering their payment information during checkout. Validating CVVs will go a long way to verify the legitimacy of a payment and help deter unauthorized activity. But, some merchants still do not require buyers to provide CVVs during checkout, leading to a heightened risk of chargebacks.
An effective chargeback solution, in this instance, would encourage merchants to ask for CVVs prior to payment. The solution would also identify other root causes related to chargebacks, such as merchant error, bad affiliate traffic, or convoluted cancellation procedures.
#4 | Demonstrate a Positive Return on Investment
An effective chargeback solution is not free. Depending on the approach you take, your chargeback solution may demand significant resources. None of this is really a problem, though, as long as you see a return on your investment.
Finding a chargeback solution that proactively reduces the frequency or volume of chargebacks is only half the battle. The true test of whether a chargeback solution is “worth it” or not is whether it saves you more money and time than it costs.
At Chargebacks911, we’ve built an end-to-end chargeback management platform that has a proven track record of generating a positive return on investment (ROI). Simply put, our chargeback solution helps you recover more in penalties and lost revenue than it costs you to implement. Click here to see how you could save.
What Questions Should You Ask Before Selecting A Chargeback Solution?
As you might expect, not all chargeback solutions are created equal. So it’s important to know what benefits you should expect from a reliable chargeback solution provider:
What Approaches Can You Take?
Broadly speaking, merchants can choose from one of three chargeback solution types: self-management, software as a solution (SaaS), or a fully-managed outsourced solution. These solution categories vary in terms of price point, complexity, and effectiveness.
Self-Managed Chargeback Solutions
A self-managed solution to chargebacks is exactly what it sounds like. You attempt to prevent and resolve chargebacks using your own internal tools and expertise. At the minimum, this means familiarizing yourself with chargeback reason codes, common chargeback triggers, and the evidence needed for responses.
On the other end of the spectrum, merchants with large budgets may wish to build an in-house team of chargeback analysts and dispute managers who can manage the chargeback lifecycle from end-to-end. Suffice to say, self-managed solutions can range from nearly free (e.g. a manual, do-it-yourself approach) to millions of dollars per year (e.g. hiring an in-house team of specialists).
Software-as-a-Solution (SaaS)
SaaS tools are cloud-based chargeback management platforms. SaaS-based chargeback solutions are often built with integration in mind, allowing you to connect your proprietary tools and data feeds to the software platform.
Software-based chargeback solutions are a good fit for small- and medium-sized businesses that want a rapidly deployable, easy-to-implement platform at a reasonable price point.
One disadvantage, however, is that SaaS-based chargeback solutions are only customizable to a limited extent. Although this is a non-issue for businesses that contend with a low volume of ongoing chargebacks, a fully-managed outsourced solution may be a better fit for enterprise-level merchants.
Fully-Managed Outsourced Solution
A fully-managed, outsourced solution is the most comprehensive form of chargeback management solution available on the market. In a fully-managed solution, every phase of the chargeback lifecycle, from risk management and prevention to data analysis and representment, is handled by a third party.
You will not need to participate directly in the chargeback management process. But, your solution provider may offer regular reporting, benchmarking, and ROI analysis to keep you informed about the work being carried out in the background.
The Right Solution for You
It doesn’t matter if you need a fully-managed chargeback solution, or just some help here and there. Chargebacks911 has you covered. We challenge the status quo by proving how effective comprehensive chargeback management can be.
Chargebacks911 offers:
- Customized Solutions: A dual-layer approach that addresses both sides of the issue (prevention and representment) drives revenue recovery and reduces chargebacks in the long term.
- Effective Representments: Approaching the representment process from a data-driven, tactical angle will help recover revenue and drive long-term growth.
- Intelligent Source Detection: No more relying on chargeback reason codes. ISD technology lets you fight chargebacks based on the true reason, not just the reason code.
- Merchant Compliance Review: There are more than 100 potential errors and missteps that can cause chargebacks. Professional review lets you eliminate triggers that lead to chargebacks.
- Dispute Prevention: Stop chargebacks before they’re ever filed. Chargeback alerts ensure that you never get caught off guard by another dispute.
Chargebacks911 has what you need, when you need it.
We offer highly scalable chargeback solutions customized for any business, of any size, in any industry. Call us today and claim your free demo.
FAQs
What is a chargeback solution?
A chargeback solution refers to strategies, tactics, and technologies that merchants can deploy to minimize and mitigate the risk and frequency of present and future instances of chargeback fraud.
How do you resolve chargeback issues?
You’ll need to gather evidence in support of the disputed transaction’s legitimacy and submit it to the issuing bank. Doing so enables you to contest the chargeback and increases the likelihood that the disputed charge is resolved in your favor.
Why would someone do a chargeback?
Buyers file chargebacks for both valid and invalid reasons. If the buyer detects unauthorized activity on their card, or receives severely delayed or damaged goods, they can file a chargeback. Illegitimate reasons for chargebacks include buyer’s remorse, family fraud, cyber shoplifting, or fraudulent intent on the part of the buyer.
Who decides who wins a chargeback?
The issuing bank decides who wins and loses a chargeback through the dispute process. This allows both the buyer and the merchant to submit evidence that either supports or refutes the legitimacy of the chargeback. If the buyer wins the dispute, the charge is reversed and the merchant is assessed chargeback fees. If the merchant wins the dispute, the charge remains and the buyer may incur penalty fees.
What happens if you don't respond to a chargeback?
If you’re a merchant and you don’t respond to a chargeback, you lose by default. That means the charge disputed by the buyer will be reversed in their favor. On top of that, you will also incur chargeback fees, which range from $5 to $100 per occurrence.
