Automated Chargeback RecoveryLess Work, Better Results. Is There a Catch?

Can You Automate Chargeback Recovery? Does It Make a Difference?

Roughly one-third of Americans use automated bill pay for at least some of their monthly expenses. The most consistent reason is the convenience, but the benefits go beyond that: there’s increased efficiency, less chance of human error, and the comfort of consistency. 

The same rationale applies to merchants who implement automated chargeback recovery technology.

Under normal circumstances, challenging an invalid chargeback requires the merchant to gather evidence, craft a rebuttal letter, and submit a complete representment package — all while adhering to tight (and strict) deadlines. Automated chargeback recovery tools do this work for you. But, will automation affect your win rate and recovery numbers?

To answer that question, we need to take a deeper look at some of the pros, cons, and myths of the process overall.

Why More Merchants Are Turning to Automation

Combatting illegitimate customer chargebacks is a necessity. Fraudulent claims cost you the order value, plus the refund, plus additional associated costs. They also needlessly drive up your chargeback ratio, which can lead to even more expenses.

With all that at stake, challenging these bogus chargebacks seems like a no-brainer… at least in theory. In reality, you’re going to dump a lot of time into each response. Creating manual responses sucks up resources.

For one thing, the process can be incredibly complex. Different card networks have different reason codes and different evidence requirements. The regulations regarding representment are updated on a regular basis. And, scaling can be a nightmare; practices that work with ten chargebacks per month can completely fail if you end up getting 100 in a given month.

All this has to be accomplished under heavy deadlines, with a high potential for human error. That’s not the worst part, though. When you submit a response, you’re going into it knowing that, statistically, you probably won’t win.

Merchants often decline to fight chargebacks because the costs are simply too high compared to the potential payoff. But, what if the process wasn’t dependent on your manpower? That’s where automation comes in.

More and more merchants are choosing to automate the response process, looking for a cost-effective road to higher gains. Are they on to something? Does automation have the potential to solve all your chargeback problems? 

What Does Automated Chargeback Recovery Entail?

Before we start talking about the results of automated recovery, we should probably explain what we’re talking about here. From the initial implementation all the way to analysis of specific cases, we can break things into four main facets.

An automation system must be integrated into your current process. It will need to be connected to your payment processors, your CRM, your shipping providers, or through a mutual data-sharing arrangement (such as FTP or API). That’s what allows the system to automatically grab all the transaction, customer, and delivery information it needs to build a response. There are security concerns here, of course, but we’ll cover that a little later on.

Once the necessary access is granted, the rest of the integration is pretty direct. Start to finish, the install may take anywhere from a few hours to a few days.

Information gathering is an ongoing process that starts before you receive your first dispute. Because the algorithm needs a baseline to work from, your system will begin scooping up general data (different regulations and reason codes, required evidence, deadlines, etc.) as soon as it is up and running.

By necessity, your first responses will totally rely on outside data. The machine-learning platform, however, will learn from each response you submit. The more you use the system, the more it adapts to your situation, and the more weight it will start giving to specific cases. 

Combining external information with internal learning, the system can gather the most appropriate evidence and create a comprehensive response/rebuttal package tailored to each individual chargeback you contest.

Automated information gathering and case-building is a huge time-saver… but none of that matters if you miss the submission deadline.

There are more parties — and more steps — to the dispute process, each with a specific time frame to conduct the work they need to do. Luckily, your automation software tracks those, as well, and will automatically file submissions to fall within the appropriate window.

A sophisticated solution will also track each response’s lifecycle, keeping you informed as it progresses through the system. This includes the pre-arbitration and arbitration phases, should the case advance that far.

Machine learning records data from each case, including wins and losses. It adds all new information into its algorithm, increasing accuracy and fine-tuning its processes. 

Tracking, analyzing, and reporting results can also help nail down root causes for your chargebacks. This, in turn provides actionable insights for both better representment outcomes and potential future dispute prevention.

Does Chargeback Response Automation Work?

This is all well and good, but we’re still back to our original question: when it comes to recovering losses from chargebacks, does automation work?

The simple answer is yes. The responses are tailored to each case, and not subject to human error. Each rebuttal will be built to the card brands’ specifications, and submitted within the required time frames. You can predefine which disputes you want to challenge, as many or as few as you wish. Almost by default, your win rates will increase.

That said… it’s hard to tie down specific numbers. Results will vary based on volume, card brand, merchant vertical, types of chargebacks, and more. But, because each case is customized based on the most minute details and empirical evidence, you’re likely to see more reversals than if you were doing it yourself.

Common Concerns About Chargeback Automation

If all this is as good as it sounds, why aren’t merchants tripping over themselves to sign up? Well, some of it can be traced to a lack of information: for example, they don’t know how much they stand to gain. 

It makes sense that merchants would have questions, but sometimes you might not even know which questions to ask. We’ve tried to anticipate a few based on our experience, to help you understand your own situation:

How to Know if You Need Automation

Here’s another question you might ask: even if chargeback recovery automation works, is it worth it to you? While it could benefit almost any business, it’s certainly going to bring a better ROI for some merchants than for others.

For instance, if you get two disputes a year, automation may not be your most profitable move. But, if you’re getting buried alive by chargebacks, you should probably start looking for a provider now.

Most businesses, though, are somewhere in between. So, I created this table to help you self-assess whether automation is right for you.

When automation makes sense	Signs you might not need it yet
You’re receiving 20+ chargebacks per month	Very low chargeback volume (less than 10 per month)
Your win rate is below 30%	Single product/service with simple evidence requirements
Staff time on chargebacks exceeds 10 hours/week	Existing process is efficient and effective
You’re approaching card network monitoring thresholds	Your chargeback rate is relatively low (below 0.3%)
You lack representment expertise	You see an average win rate of more than 50% among the responses you submit

I also want to point out here: you don’t have to choose one or the other. You could also consider a hybrid approach.

Automated chargeback recovery is faster, more accurate, and more likely to succeed than a manual response. But, an automated solution isn't always capable of detecting nuance or recognizing extenuating circumstances. 

A hybrid system, such as the platform offered by Chargebacks911®, combines the best elements of both, with machine learning backed by live human expertise. It’s typically the most efficient and cost-effective approach, offering more timely and accurate responses, while allowing more control and flexibility than a fully automated solution.

What to Look for in an Automated Recovery Solution

You’ve decided that you’re ready to automate your chargeback responses. Now what? Like every other aspect of your business, making the right choice starts with knowing what you need. Here are some elements to consider as you begin your search.

What About Pricing?

Obviously, price is important. You’ll naturally want the highest return on your investment. Figuring out the best option beforehand isn’t always easy, though, as there are two distinct pricing models:

In either case, make sure you know the details before you sign. Check for hidden fees: setup or onboarding charges, costs for additional integrations, charges for specific reason codes or card brands, and so on. A transparent pricing structure should clearly outline what’s included.  

If a provider offers any type of guarantee, make sure you know what it covers… and what it doesn’t. Chargebacks911, for example, offers the only performance-based ROI guarantee in the industry.

Choose Experience. Choose Results.

The heart of any system is its technology. While “off-the-shelf” recovery automation is available, there are advantages to a solution that was designed and built exclusively to manage chargebacks. The Chargebacks911 platform, for example, offers patented and proprietary features unavailable from any other provider. 

Chargebacks911 is the original end-to-end chargeback management solution built by merchants, for merchants. We’re continually upgrading and optimizing our offerings to combat the latest fraud threats, incorporating (and often inventing) cutting-edge features and capabilities. We work with any industry, integrate with all systems, and deliver net win rates that top competitors’ gross numbers.

If you’re thinking about making the move to automated recovery, you owe it to yourself to start at the top. Contact us today to learn more.