Chargeback Management Software: Get the Full Picture.
If you’re even slightly concerned about the number of chargebacks you receive, you’ve probably wondered about chargeback management software. Does it work? Is it effective? Is it worth the investment?
The simple answer is “yes.”
The right chargeback management software lets you save time, recover revenue, and see long-term chargeback reduction. That said, not all products offer the same results. Your business is unique, so you’ll need a provider that can tailor a solution to your specific needs.
In this post, we’ll explore how chargeback management software works. We’ll also learn to identify the solution that will work best for your business.
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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“Chargeback management software” is a broad term. It can refer to services, single programs, or complete platforms. Different providers offer services targeting different aspects of the chargeback process.
Still, the end goal of all chargeback tools is the same. You want to protect your business—and your bottom line—against the costs of chargebacks, both now and in the future.
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How Does Chargeback Management Software Work?
Chargebacks are forced bank payment reversals initiated by an issuing bank. Essentially, you are reimbursing losses a cardholder suffered due to fraudulent transactions that you didn’t prevent, or due to mistakes or errors made in the transaction process. Chargeback software can automate different aspects of the chargeback process. This saves you time, effort, and money.
Managing chargebacks effectively requires attacking the problem from two angles: prevention and revenue recovery. Ultimately, you want to stop customer disputes from happening at all. In the short term, you also want to challenge invalid chargebacks and reclaim as much money as you can.
Chargeback management software collects and analyzes data from multiple sources, including previous customer disputes. The best software will use this information, along with your custom parameters, to let you:
- Track inquiries, disputes, and representments.
- Flag potentially fraudulent claims.
- Detect patterns in chargebacks received.
- Process transaction errors, such as double payments.
- Sync with other tools for comprehensive protection.
- Automatically respond to incoming chargebacks.
- Gather compelling evidence related to the claim.
- Identify errors/risks/threats, and provide actionable advice
Can I Manage Chargebacks on My Own?
Yes. It’s possible to handle your chargebacks in-house without any chargeback software…as long as you don’t experience more than the occasional chargeback, that is.
Professional help may still be your best option. The chargeback process is complex, and the specific rules and requirements will differ, depending on the card network, the acquirer, the issuer, or other factors. Managing these customer disputes requires significant investments of time and resources. You’ll also need ongoing education on the constant updates to regulations.
While there may be some perks to self-managing disputes, the best software solutions offer distinct advantages. If properly deployed, your chargeback software will:
- Allow you to free-up staff and use your resources more effectively.
- Track and store reporting information to gauge performance and adjust as needed.
- Watch transactions for potential chargeback triggers.
- Produce error-free, compliant dispute cases.
- Significantly raise your win rate and ROI.
Obviously, there are multiple reasons to implement dispute management software. But does this mean you must go with a fully managed solution? Not necessarily.
3 Approaches to Chargeback Management Software
There are three basic approaches to using chargeback management software: SaaS, fully managed, or a hybrid solution.
SaaS (short for “software as a service”) is a self-service option. Your provider licenses management 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 involves ongoing involvement on your part. For example, you’ll have full view of all your data, but you’ll need to do your own analyzing and reporting.
With a fully-managed service, you outsource all chargeback management to professionals. This can be a reliable alternative to juggling chargebacks yourself. It allows you to take disputes completely 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.
Of course, you don’t necessarily have to pick one or the other approach. It’s possible to combine elements of both to better fit your needs.
Let’s say you want to handle chargeback prevention in-house. A SaaS solution may allow you 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 work on preventing disputes, while a third-party provider does the “heavy lifting” of building cases on your behalf.
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Is Chargeback Management Software Worth It?
Most software options will provide at least a measure of chargeback relief. To get the most from your chargeback management software, however, you must have the correct set of tools to fight your specific issues. For example, if the bulk of your disputes stem from internal merchant errors, even the best alerts program won’t be much help.
So, what approach to chargeback software would best fit your needs? There are a number of factors to consider when evaluating options, including:
Interception vs. Prevention
Is the point to catch disputes before they progress to the chargeback phase, or proactively stop them from happening? Both can be important, depending on your needs.
Look for a tool that can accurately separate chargebacks based on their true source—not just the reason code.
Can the provider deliver a minimum win rate within a set timeframe? Is that backed by a performance-based ROI guarantee?
Is the dispute management software smart enough to separate legitimate chargebacks from friendly fraud?
Will the software integrate with your existing systems and hardware, or will you need to make additional investments?
Can the solution aggregate data for you, or will you need to wait and pull data manually? Given the tight timeframes of the representment process, you need access to data sooner rather than later.
Is the software capable of generating clear, concise reports? Will it allow you to track your performance and ROI with relevant metrics?
Can you customize your dashboard or chargeback app to give you the data you need, when you need it?
How are the fees structured? Are there monthly service fees or a one-time cost? Is the price based on a case-by-case payment structure?
Again, the best provider for your specific situation depends on your product vertical, business model, clientele, and dozens of other factors. The above list, while not comprehensive, is a good place to start. It should help you narrow down the number of providers to consider.
Ask the Right Questions
Not sure where to start the search? Well, first you’ve got to know which questions to ask. When evaluating options for chargeback management software, ask whether the product:
- Intercepts or prevents chargebacks? Is the point to catch disputes before they progress to the chargeback phase, or to take preemptive action to stop them from happening?
- Identifies chargeback sources? Can the tool separate chargebacks based on their source and prescribe the best response of each individual case?
- Guarantees a win rate? Can the candidate guarantee a minimum win rate within a set timeframe? Is that backed by a guaranteed ROI?
- Fights all chargebacks (even when it shouldn’t)? Is the dispute management software or service smart enough to separate legitimate chargebacks from friendly fraud?
- Is agnostic? Does it integrate it into your existing framework, or need additional integrations?
- Works in real time? Do you need to wait to pull data manually, potentially costing you precious time in representment process? Or, does the tool aggregate data for you?
- Can provide relevant reporting? Does the tool allow you to track your performance and ROI with relevant metrics?
- Offers customizable data? Can you customize your dashboard or chargeback app to give you the data you need, when you need it?
- Will save you money? Are there monthly service fees or a one-time cost? Is the price based on a case-by-case payment structure?
Of course, that’s a shortlist of basic questions for potential solution providers. You should already have an extensive list of questions to ask about any new product you consider. Exactly what you need to know depends on your product vertical, business model, clientele, and dozens of other factors.
Creating a Custom Management Solution
Even the most advanced chargeback management software is just that: software.
It can be a powerful tool to streamline processes and increase ROI. 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, built around fully managed, in-house SaaS, and hybrid service options.
Our multi-tiered strategy features a comprehensive suite of tools integrated into a single dashboard for ease of use. This includes Intelligent Source Detection®, a proprietary tool that combines machine learning and human expertise to reveal chargeback sources.
Our Merchant Compliance Review features an exclusive 106-point diagnostic that reveals simple policy and practical chargeback triggers. And our combined chargeback alerts system lets you intercept disputes before they become chargebacks by offering the widest coverage available in the industry.
Want to learn what this could mean to your business? Click below for a free demo and see what award-winning chargeback management software can do for you.