Is Chargeback Automation the Best Option for Merchants?
For some businesses — particularly those in the eCommerce space — fighting bogus chargebacks can be a full-time job.
When you realize how many resources go into contesting illegitimate disputes, it can sometimes seem like the whole thing is more trouble than it’s worth. That’s not true, of course; loss of revenue is just one of multiple reasons to challenge fraudulent claims.
You don’t need to work harder to optimize your payoff, however. Instead, you need ways to work smarter. That’s where chargeback automation comes into play.
Recommended reading
- 10 Common Misconceptions about Chargeback Win Rates
- How to Handle Chargebacks: 4 Easy Steps to Follow in 2025
- What’s an “Acceptable” Chargeback Rate? Why Does it Matter?
- Chargeback Reduction Plan: a Guide to Develop Your Strategy
- Chargeback Reports | Use Past Data to Stop Future Disputes
- Looking for a Chargeback Solution? 10 Questions to Ask First
What is Chargeback Automation?
- Chargeback Automation
Chargeback automation is an umbrella term for any of the tools or techniques that can automate chargeback management, decreasing the need for manual processes.
[noun]/chärj • bak • ôd • ə • mā • SHən/
As the name implies, “chargeback automation” is a general term for all the ways you can automate parts of your chargeback management. Technically, that can refer to things like automated credit dispute verification, or it can cover Visa’s Compelling Evidence 3.0 guidelines, which can help automatically deflect chargebacks before they’re filed.
But, people most commonly refer to chargeback automation in the context of a chargeback response. The aim here is to automate some (or all) of the steps involved with representment.
This might include streamlining the gathering of evidence, or automating how you generate and submit dispute responses. The idea is to make representment faster and more efficient. By taking manual handling out of the picture, you can lower the odds of human error, late responses, and inaccurate or incomplete submissions.
Chargeback automation should be simple and intuitive to manage. Whether through a web portal or a dedicated chargeback management app, you should be able to customize and set parameters to achieve the best results for your business.
How Can Chargeback Automation Help?
From the very beginning, the promise of computers has been that they will make our lives easier. Chargeback automation is a perfect example of how that works.
Through the use of artificial intelligence (AI) and machine learning, you’re able to create a streamlined process that manages disputes through every phase of the chargeback process.
Potential Downsides to Chargeback Automation
Dispute automation can be a game-changer, especially for merchants who are being inundated with faulty chargeback claims.
Even if you don’t win a reversal in every case, contesting invalid claims can still help protect your business’s reputation. Automation is a great way to keep costs down while responding to as many fraudulent chargebacks as possible.
That said, chargeback automation is not a silver bullet to solve all your chargeback problems. There are facets of chargeback management that still require human oversight. For example:
Evaluating Reason Codes
Automated systems are designed to respond based on a claim’s reason code… but that’s all they can do. You may look at a dispute and see that the reason code doesn’t reflect the actual situation. A manual response would still have to answer the reason code. But, you might be able to include additional explanations and evidence to show that the original transaction was valid.
Cases With Extenuating Circumstances
Let’s say a customer disputes a charge, saying you made an error. You might look at the claim and realize that the customer was right, so you don’t want to challenge the dispute. An automated system, however, might go ahead and file a response, based on its settings. You end up wasting everyone’s time by submitting a representment you know you can’t win.
Avoiding Bad Inputs
Machine learning means your automated system will take what it learns from each response and feed that data back into its system. In theory, results should become increasingly accurate as time goes by. That assumes, however, that all the new captured data is accurate. What if the AI doesn’t recognize a misjudgement, and continues basing its decisioning on bad information? Instead of getting more accurate, your solution will become increasingly less reliable.
As helpful as chargeback automation can be, not every merchant needs it. If you only experience the occasional customer dispute, a fully automated response system is probably not worth the investment.
Machine Leaning & Human Oversight:
the Best of Both Worlds
Chargeback automation has multiple advantages over manually trying to handle chargeback responses. For standard tasks, a computer is going to be faster and more efficient. Plus, it will never get bored; humans do, which can easily result in errors.
On the other hand, computers are… well, computers. They aren’t always capable of detecting nuance or recognizing extenuating circumstances. Their actions are totally dictated by how they are coded and the information they have to work with.
A hybrid system, such as the platform offered by Chargebacks911®, combines the best elements of both methods.The result is chargeback responses that are more timely and accurate than a fully manual system, with more control and flexibility than full automation.
The advantage of a hybrid system is evidenced by our net win rates, which are the highest in the industry. Contact us today to learn more.
FAQs
What is chargeback automation?
Chargeback automation refers to the technology used to manage one or more steps of the chargeback dispute and representment processes. The benefit of automation is its ability to perform routine or detail-oriented tasks faster and more accurately than humans.
What does a chargeback specialist do?
A chargeback specialist helps the merchant in all areas of chargeback handling, but specifically rules and compliance. They will keep up to date on complex arbitration updates and other issues, as well as communicate with card networks to keep current on policies and procedures.
Do chargebacks hurt companies?
Yes, absolutely. Every single chargeback means the merchant must provide a full refund of both purchase price and any associated monies such as shipping or insurance costs. Also, the customer typically doesn’t return the order, resulting in additional losses. Chargeback fees and potentially other penalties are non-refundable, even if the chargeback is successfully contested.
What is the role of a dispute analyst?
A chargeback analyst is a professional responsible for coordinating or managing different aspects of customer disputes for a merchant. This position can involve working directly with customers to resolve disputes, but also includes routine tasks such as proactively filing evidence, creating and submitting documentation to banks, and analyzing suspected cases of chargeback fraud. Click here for more information about dispute analysts.
