When Does a Merchant Need Chargeback Management Software?
Retailers — especially eCommerce merchants — know the pain of chargebacks. These forced bank payment reversals have a serious negative impact on revenue, and attempting to manage the problem on your own can often seem hopeless.
There’s good news, though: chargeback management software can help.
Software solutions allow you to automate different aspects of the process. You can lower your chargeback rate while saving time, effort, and money. Automation can also increase accuracy, helping you fine-tune your management strategy for long-term chargeback reduction.
Of course, each business has unique needs, and not all products will deliver the same results in all contexts. In this post, we’ll explore how chargeback management software works, then look at ways to identify which solution will work best for your business.
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- How to Handle Chargebacks: 4 Easy Steps to Follow in 2024
- Chargeback Processing: Time Frames & Fees for 2024
What is Chargeback Management Software?
- Chargeback Management Software
Chargeback management software can refer to any program or platform that assists merchants in the process of automating chargeback prevention and/or contesting invalid disputes.
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First, let’s clarify what we’re talking about here.
“Chargeback management software” is a broad term that can refer to services, single programs, or complete platforms. Different tools target different aspects of the dispute process; some more effectively than others. The end goal, however, is always to make managing chargebacks faster and easier.
Chargeback management software is meant to automate or streamline many of the most mundane tasks required for chargeback prevention and recovery. Because disputes can be complex, many tools are designed to focus on one particular aspect of chargeback management, as opposed to the entire process.
Can I Self-Manage Chargebacks?
Yes. It’s possible to handle your chargebacks in-house without any type of chargeback app. But, that assumes you don’t experience anything more than the occasional claim.
The chargeback process is not intuitive. The specific rules and requirements will differ depending on the card network, the acquirer, the issuer, or other factors. Managing customer claims requires significant investments of time and resources. You’ll also need ongoing education on the constant updates to regulations. Most merchants find that professional help is their best option.
Deciding to manage chargebacks in-house makes it even more imperative to identify the best chargeback management system for your business. That doesn’t necessarily mean you need to go with a fully managed solution, though, as we’ll see later.Learn more about in-house chargeback management
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Approaches to Chargeback Management Software
Looking at an overall chargeback management software strategy gives the merchant three basic options: self-managed (SaaS), fully-managed service, or a hybrid solution.
SaaS (short for “software as a service”) is a self-service option. Your provider licenses software to you on a subscription basis. Many merchants, especially small- to mid-size businesses, like to explore this option first.
SaaS offers flexibility and a lower price point. However, it also demands ongoing involvement on your part. For example, you’ll have a full view of all your data. But, you’ll probably need to do your own case building if you want to respond to chargeback through representment.
With fully-managed service, you outsource all chargeback management activities to professionals. This can be a reliable alternative to juggling chargebacks in-house. It allows you to take disputes off your plate and focus on running your business.
The only downside is limited direct insight into the process. That’s why it is important to engage a provider who offers accurate, detailed, and user-friendly reporting to track performance and ROI.
It’s possible to combine elements of both to better fit your needs. With a hybrid approach, you can deploy a self-management solution to more easily monitor data and proactively spot trends. At the same time, you could opt to outsource dispute management for responding to invalid friendly fraud claims. You can work on preventing disputes, for instance, while a third-party provider does the “heavy lifting” of building cases on your behalf.
Is Chargeback Management Software Worth It?
Yes… if implemented properly.
Deploying any solution aimed at addressing chargebacks should provide at least some relief. To get the most from your dispute management software, however, you must have the correct set of tools to fight your specific issues.
For example, let’s say you deploy an advanced software solution aimed at stopping chargebacks resulting from criminal fraud. It won’t be much help if the bulk of your disputes stem from internal merchant errors.
That said, the right chargeback management software solutions, when properly applied, could provide numerous advantages:
Chargebacks911® were the first solution providers to offer a fully customizable, user-friendly, end-to-end solution for chargeback management. Click here> to learn more about our technology.
Questions to Ask: How to Decide Which Solution is Right for You?
You might already have some questions to ask potential providers. Deciding the most relevant and important questions will depend on your product vertical, business model, clientele, and dozens of other factors.
That said, some of the most pressing questions that all merchants should ask include:
Is the point to catch disputes before they progress to the chargeback phase, or proactively stop them from happening? Both are valid approaches. But, one function may be more useful depending on your situation.
Knowing the chargeback reason code tied to a claim is not the same as knowing why it happened in the first place. Look for a tool that can accurately separate chargebacks based on their true source; not just the reason code.
Will this solution guarantee a high net win rate within a reasonable amount of time? Is the guarantee based on actual performance?
How smart is the solution? Does it employ AI and machine learning? Does it treat all chargebacks equally, or can it differentiate between valid chargebacks and friendly fraud disputes?
Is this tool agnostic in regards to hardware, software, and processors? Will it integrate it into your existing workflow? Or, will it require extensive retooling to meet your needs?
What happens when your business grows? Is the solution flexible and intelligent enough to keep pace, or will you need to look for a different tool once your business reaches a certain scale?
Given the tight timeframes of the representment process, there’s little time to manually pull data. You need dispute software that can aggregate data for you and generate reports in real time. Speed of implementation is also something to consider.
Will the software’s reporting capabilities meet your needs, including performance and ROI tracking? Are reports clear, concise, and easily read, or simply data dumps with no context? Is it possible to create custom reports?
Does the solution require multiple dashboards and sign-ins? Can it consolidate both its own features and third-party offerings into a single dashboard?
Will this tool save you money? If not, it’s too expensive at any price. Is there a monthly service charge, a one-time cost, or a case-by-case payment structure? Also, be sure to check for hidden fees.
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Of course, that’s a shortlist of basic questions for potential solution providers. Again, the best provider for your specific situation depends on you and your business. The above list, while not comprehensive, is a good place to start.
Using Software to Create a Custom Solution
Even the most advanced chargeback management software is just that: software.
It can be a powerful tool to streamline processes and increase your return on investment. But, like most tools, it works better in the hands of an expert.
At Chargebacks911®, we take our own approach to chargeback management software. We offer end-to-end coverage with a system- and hardware-agnostic technology platform that works to both prevent chargebacks and optimize revenue recovery.\
Plus, our multi-tiered strategy features a comprehensive suite of tools integrated into a single user-friendly dashboard. This includes Intelligent Source Detection®, a proprietary tool that combines machine learning and human expertise to reveal chargeback sources. So, whether you’re looking to implement a fully-managed, self-managed, or hybrid approach, we have the right solutions to fit your needs.
Want to learn what this could mean to your business? Contact us today for a free demo, and see what award-winning chargeback management software can do for you.
What is chargeback management software?
Chargeback management software can refer to any program or platform that assists merchants in the process of automating chargeback prevention and/or contesting invalid disputes. Through monitoring, analyzing, and tracking transactions, these tools help mitigate the risk of fraudulent disputes before they occur and retain revenue from any chargebacks the merchant does receive.
Is filing a chargeback illegal?
Absolutely not. Chargebacks are a federally guaranteed right. Filing illegitimate chargebacks, however, can have serious consequences. Friendly fraud is technically a form of wire fraud, which in some cases could lead to jail time.
How do you manage chargebacks?
To manage chargeback issues, promptly address and contest invalid disputes. Implement strategies to prevent future occurrences by identifying and rectifying the underlying causes, such as improving customer service or enhancing fraud prevention measures.
What is chargeback software?
Software programs or platforms that assist merchants in the process of automating chargeback prevention and/or contesting invalid disputes.
Do companies fight chargebacks?
While merchants have a guaranteed right to challenge invalid chargebacks, businesses of all sizes often allow obviously illegitimate chargebacks to go unchallenged. Due to the complexity of the process and the statistically lower success rate, many write off the losses as an unavoidable cost of doing business.