What is a Chargeback Analyst? Should You Hire One?
When a dispute happens, a chargeback analyst could be your first line of defense.
They must be well-versed in the latest domestic and global chargeback rules and regulations. They must also keep up-to-date on the latest payment systems, as well as both past and current fraud scams. And, as every facet of the representment process is time-sensitive, the chargeback analyst must sometimes be available at non-traditional times, such as evenings, weekends, and holidays.
- Chargeback Analyst
A chargeback analyst is a payments industry professional who deals with banks, processors, consumers, merchants, and card networks. Their primary job is to review, analyze, and resolve customer disputes.
[noun]CHärj • bak • an • əl • əst
Chargeback analysts are often employed by banks or credit card companies. However, some large, enterprise-level merchants may hire dedicated analysts as well. While merchants of any size can be threatened by chargebacks, it’s typically not cost-efficient for smaller companies to have a full-time analyst on staff.
But, before we explore the increasingly important role of the chargeback analyst, let’s talk a little about chargebacks themselves.
What is a Chargeback?
This is a great place to start if you’re new to the concept of chargebacks. For the purpose of this article, we’ll keep things simple: a chargeback is a guarantee mandated by the federal government and offered to payment cardholders. If a consumer has a problem with a card purchase, and can’t resolve the problem directly with the merchant, they can appeal to the card issuer to recover their funds.
This was originally intended to be a safety net for consumers in case of fraud or a dishonest merchant. The chargeback system was created fifty years ago, though; long before the internet and eCommerce. In today’s digital world, consumers have uncovered loopholes in the system they can use to subvert the process.
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Many use chargebacks a tool to commit fraud, engaging in a practice called “cyber shoplifting.” They may also abuse the chargeback process unintentionally (a practice called friendly fraud).
Combined, friendly fraud and cyber shoplifting represent between 60-80% of all chargebacks filed. As you can imagine, this results in considerable losses for merchants: over $50 billion annually…and still rising every year.
The Role of the Chargeback Analyst
A good portion of the chargeback analyst’s job involves investigating dispute cases to determine if the claims are legitimate. This means researching the transaction in search of evidence to support—or oppose—the customer’s claim.
If the dispute is valid, the analyst will be responsible for making sure refunds are issued and debited to the merchant. However, there may be solid evidence refuting the claim, such as a signed delivery slip when the customer claims that the goods in question never arrived. In that case, the analyst should recommend the merchant or bank fight back against the claim through the representment process. It’s also the analyst’s job to communicate the final decision to all parties involved.
Essentially, the chargeback analyst follows each dispute from the complaint all the way through until the case is resolved. The analyst collates and reviews information learned from the case to identify patterns or trends. Any problems that arise on a consistent basis need to be communicated to the relevant party. The analyst may also make recommendations for the merchant’s policies and procedures, helping prevent recurring problems.
What Does it Take to be a Chargeback Analyst?
There are no iron-clad rules for becoming a chargeback analyst. However, the job demands certain hard and soft skill sets.
Most companies require at least a bachelor’s degree in accounting or finance, if not an MBA. Some type of financial experience is useful, too, especially experience in payment processing.
In addition to education and experience, a chargeback analyst must possess well-developed communication, organizational, and analytical skills. The position involves regular communication with cardholders or merchants who could be upset about unfair transactions. Thus, the ability to remain friendly and professional under pressure is essential.
Analysts deal with highly sensitive financial data. This demands thorough research skills, discretion, and attention to detail. The job is defined by an intimidating mass of domestic and international rules which are constantly updated by different card brands. The analyst must maintain close familiarity with these regulations. These rules can differ based on hundreds of factors including the card network, the bank, the merchant’s geographic location, local government regulations, and more.
Finally, the ideal candidate is an expert at self-motivation and problem-solving. This person must be confident in making fast, well-reasoned decisions with minimal supervision.
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In-House Chargeback Analysts: The Appeal vs. the Reality
Locating the ideal candidate for a chargeback analyst position can challenging. Even before that point, though, you have to decide whether to hire someone in the first place. That’s the fundamental question: Should you appoint an in-house chargeback analyst, or would it be better to outsource the job?
Every chargeback costs you revenue, fees, and more. Fighting the problem by laying out more money to hire outside help almost seems counterintuitive. The extra expense doesn’t seem practical, especially for anyone struggling with cash flow issues as a direct result of chargeback issuances.
Designating an in-house employee to handle chargeback issues might seem appealing at first. After all, why spend more to address a problem that’s already sapping your revenue? However, that appeal is usually based on unrealistic expectations.
|“Chargebacks will only be part time; the employee can help with other tasks.”|
|Between monitoring for fraud, keeping ahead of constantly changing industry regulations, and representing disputes, managing chargebacks will be a full-time job and then some.|
|“Our people know the company and the product; they can represent us better than any outsider.”|
|Knowing your company is a minor part of the equation compared to knowing the chargeback system inside and out, being able to individualize disputes, and having strong existing relationships with a number of banks.|
|“Sure, there’ll be a learning curve, but once we know this stuff, we’ll be set!”|
|The rules and regulations instigated by the networks are constantly changing. The evolution of technology means new threats will continue to emerge. Without constant monitoring, your business could take a serious hit before you’re even aware of the risk.|
|“We’ll be able to oversee every step of the process.”|
|That’s true, to an extent. However, it’s probable that your prevention efforts aren’t objective enough. It’s prohibitively difficult for merchants to accurately analyze their own policies to determine chargeback triggers or effective representment.|
|“Outsiders won't be privy to sensitive company information.”|
|With a reputable PCI-compliant mitigation firm, employees will have limited access that does not disclose valuable data. Administration staff will be bonded under a liability policy, and security protocols are likely to be tighter the ones you have in place now.|
While these are all strong arguments against trying to handle chargeback management in-house, there’s an even better reason not to go it alone: the low chance of success.
In-house chargeback specialists don’t have the benefit of comprehensive analysis based on external data. As a result, they can usually only prevent or dispute a small portion of chargebacks. They can manage the “low hanging fruit,” but that’s usually as far as it goes.
When it comes to preventing and disputing chargebacks, third-party providers tend to see a much higher success rate than in-house efforts alone.
A professional chargeback manager will provide a return on your investment with easy-to-understand key performance indicators (KPIs). But, if you’re trying to manage chargebacks with in-house efforts alone, there might not be much to show for the vast number of resources invested.
As we’ve discussed on the blog before, the best approach is to combine in-house and third-party resources. This strategic method makes the best use of your resources at hand, providing cost-effective chargeback management with optimal ROI and long-term risk aversion.
Ready to Learn More?
Keeping your chargeback management efforts entirely in-house can sound appealing. However, turning to the expertise of a professional, third-party chargeback management company will almost always deliver better prevention, increased ROI, and a higher win rate.
At Chargebacks911®, our chargeback analysts work hand-in-hand with merchants. No one has more experience, knowledge, or data on all aspects of the chargeback process. Plus, we back our work with the industry’s only performance-based ROI guarantee. Contact us today to learn more…and put our analysts to work for you.