Chargeback Compliance™

cb compliance

Determine Your Chargeback Compliance™ Score

Business success demands a continual evaluation of tactics and strategies along with a careful analysis of risk versus reward. Unfortunately, it is not always easy to create thresholds and evaluation processes to gauge progress.

Challenges to Evaluating Chargeback Management Efforts

There are several reasons why a merchant is unable to accurately gauge the effectiveness of a given chargeback management strategy:

chargeback_compliance_issues1. The Payment Industry's Failure to Evolve

The chargeback process was devised in a pre-internet era. While eCommerce sales volume, technologies, and threats have evolved, chargeback regulations and policies have not. Because chargeback regulations don’t effectively address modern threats, merchants are unable to devise a scalable solution.

2. Cardholders' Friendly Fraud Assaults

Some cardholders have learned to exploit gaps in the payment industry’s stagnant chargeback regulations. As a result, friendly fraud is flourishing with a 41% annual growth rate. The onslaught of illegitimate chargebacks perpetrated by friendly fraudsters is creating a type of revenue loss that merchants are not equipped to handle.

3. Merchants' Limited Resources

Because of imbalances in the payment industry, evolving consumer behaviors, and subjective chargeback processing, automated systems are unable to deliver effective results. Prevention and representment success only comes from personal involvement. While certainly effective, merchants are unable to dedicate in-house resources to such a labor-intensive and costly process.

4. Ineffective Management Techniques

Reason codes aren’t as insightful as they once were, and merchants are not able to accurately identify the true cause of chargebacks. Three management mistakes can skew the effectiveness of any given strategy:

  • The merchant doesn’t admit to having a problem. Many merchants hope their chargeback issues will simply go away. Unfortunately, merchants must acknowledge the problem and then deal with it.
  • The merchant blames the wrong chargeback trigger. Merchants might inaccurately identify triggers because of incomplete or missing information.
  • The merchant uses the wrong approach to handle the problem. Merchants can’t use a “one-size-fits-all” approach to managing chargebacks. One tactic simply will not successfully prevent all chargebacks.

5. Delayed Risk Acknowledgment by the Card Networks

Both Mastercard and Visa have chargeback monitoring programs. Unfortunately, involvement in these programs usually happens after the merchant account is already at risk. Evaluation doesn’t come quick enough; merchants aren’t able to gauge their risk until threats are uncontrollable. Tracking and monitoring only happen after thresholds have been breached.

The Need for Chargeback Compliance™

Until recently, the challenges associated with analyzing a chargeback management technique left many merchants without a sufficient evaluation option. Fortunately, Chargeback Compliance™ finally provides the opportunity to assess chargeback activity and implement timely changes.

Chargeback Compliance™ Score is essentially a grading system designed to evaluate the chargeback health of merchants, acquirers, and processors. The Chargeback Compliance™ program is specially designed to evolve in tandem with payment processing standards and methodology.

Calculating a Chargeback Compliance™ Score

chargeback_compliance_scoreChargeback Compliance™ relates to a newly defined area of measure that takes several contributing factors into consideration. The Chargeback Compliance™ Score (CCS) calculation is based on:

  • Chargeback rates
  • Chargeback values
  • Adherence to chargeback-related industry standards
  • Attributed sources that increase chargeback counts
  • Attributed sources that decrease chargeback counts

The overall purpose of Chargeback Compliance™ is to measure potential sources of a problem in order to limit exposure. Advanced intelligence isolates targets, reduces exposure, and prevents additional risk.

Chargeback Compliance™ vs. Other Payment Industry Compliance Programs

“Compliance” is a popular term in the payment industry. Merchants, acquirers, and processors are expected to adhere to the guidelines issued by various organizations. Failure to do so, or non-compliance, can result in devastating, long-term consequences.

The two most commonly referenced compliance programs are those of the Payment Card Industry Security Standards Council and the card networks.

PCI Compliance

The Payment Card Industry Security Standards Council demands all merchants be PCI-DSS compliant. This standard relates to cardholder data security. Twelve guidelines outline data security measures that help protect cardholder information while it is in the possession of merchants, processors, and other third-party organizations.

Examples of compliancy expectations include:

  • Maintaining a firewall
  • Using anti-virus software
  • Encrypting data while in transit over public networks

Card Network Compliance

Visa and Mastercard have extensive regulations regarding all aspects of credit card transactions. Failure to follow the guidelines set forth by the card networks will result in non-compliance. There are various consequences, including expensive fees and potential account termination, associated with card network non-compliance.

Examples of compliancy expectations include:

  • Clearly disclosing terms and conditions
  • Using proper authorization techniques
  • Not exceeding negative transaction thresholds

Determining Your Chargeback Compliance™ Score

Are you ready to check your Chargeback Compliance™?

If you’ve been struggling to stay one step ahead of an assault of transaction disputes, it is time to calculate your Chargeback Compliance™ Score.

Not only do you need to check your Chargeback Compliance™Score, you need to take the resulting information and use it to reevaluate your business’s policies and practices.

Chargebacks911® is the only company on the market that has even considered this concept, technology, or innovation. After months of beta testing, our Chargeback Compliance™ program is ready to help you isolate targets, reduce exposure, and prevent additional risk.

Contact us today!

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