Chargebacks, especially invalid friendly fraud disputes, are a severe pain point among eCommerce merchants. According to the 2024 Chargeback Field Report, 70% of retailers characterized friendly fraud as either a “moderate” or “severe” threat.
Merchants aren’t overreacting, either. Data from Visa suggests that as many as three-quarters of all chargebacks filed could be invalid, thanks in part to the ease of filing chargebacks and the difficulty merchants face when re-presenting them.
That said, there are solutions. Chargeback management software, which automates chargeback detection, prevention, and representation, can help merchants regain the upper hand against friendly fraud. In this guide, we take a look at what chargeback management software does and what types of solutions exist in the market. We’ll also talk about how to choose the right solution, what to expect during implementation, and whether a software-based approach is enough.
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.
This software can notify you about pending disputes, help your chargeback analysts automate the representment process, and more.
Read MoreFrom a qualitative standpoint, chargeback management software is definitely worth the investment. It can help you identify fraud, block actors, and win chargebacks, making it an invaluable resource.
But, chargeback management software isn’t free. For this reason, you will want to consider things from a financial perspective as well. Software solutions that generate a positive ROI by costing less than the amount of revenue prevented and recovered are worth considering. But, factors like the reputation of the vendor and the effectiveness of the solution should also be considered.
Read MoreYou should do comprehensive due diligence before picking a software solution. Start with the basics: what stages of the chargeback process does the software help with, and how accurate is it?
How does the tool work — is it rules-based, AI-enabled, or both? How quickly does it deliver new data and reports? Can it adapt to your fraud surface over time?
Costs and implementation timelines should also be addressed. For example, what’s the fee structure like? Is there a performance guarantee? What other add-on services or equipment is required?
Read MoreChargeback management software pricing models vary widely, from monthly subscription fees and tiered pricing to per-transaction fees and success fees.
Even between leading providers like Stripe, Chargeflow, or Kount, there is significant variance in pricing and features. And, if you’re an enterprise-level merchant looking for a bespoke configuration, you may be subject to custom or value-based pricing.
Read MoreImplementing chargeback management software can be simple or complex, depending on the size of your business.
For small businesses, chargeback management software is essentially plug-and-play. Pay for a plugin or SaaS, and you’re essentially up and running. Implementation can be more complex for mid-sized businesses. Some development work will probably be needed, and you can expect onboarding to involve live training and a steeper learning curve.
For enterprise-level businesses, implementation can take much longer (again, depending on the provider). Technical challenges are only one hurdle; getting buy-in from other departments and ensuring that the solution addresses the needs of the entire company will be an equally complex challenge.
Read MoreChargeback management software makes up an important part of your fraud defenses. But it’s not a solo show; effective fraud management ultimately involves a concert of other efforts.
You should augment chargeback management software with fraud detection tools at earlier stages of the buyer journey, plus helpful customer service, clear billing descriptors, buyer-friendly return policies, and accurate inventory management and order fulfillment practices.
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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.
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.
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.
Software programs or platforms that assist merchants in the process of automating chargeback prevention and/or contesting invalid disputes.
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.
