Chargeback Regulatory ComplianceHow to Turn Rule Keeping into a Competitive Advantage
How Important is Chargeback Regulatory Compliance? Can You Use It in Your Favor to Avoid Chargebacks?
What comes to mind when you hear the word “compliance?”
Many consider it to be little more than an administrative hassle. Compliance is a bunch of red tape, bureaucratic headaches, and a constant tilt-a-whirl of ever-changing regulations.
But, what if you could flip the script? What if compliance wasn’t simply a defensive obligation? What if you could use it as an offensive strategy?
In this post, we’ll examine ways to treat regulatory requirements not as a burden, but as an opportunity: a chance to build trust, improve the customer experience, and ultimately strengthen your bottom line.
Stay Up to Date on Chargeback Compliance Changes
Most merchants see compliance as a chore. The fact is, it does add work to your day-to-day operations. However, businesses should start to think of compliance more as a core part of their operations. That way, following the rules is not just a frantic and unpleasant scramble: it’s a tool you can use to outshine your competition.
Doing this intentionally starts with creating a system for monitoring regulatory changes. You don’t need an expensive team of in-house lawyers for this; it can be as simple as subscribing to payment processor newsletters and industry publications. What’s important is not missing any new mandates.
It’s equally important to stay current on the latest rule updates coming from the different card brands. As an example, consider VAMP, or the Visa Acquirer Monitoring Program. While it may not impact compliance directly, it does shift the way risk assessment is calculated.
That can lead acquirers to enforce stricter controls and monitoring, which in turn could drive the need for merchants to improve chargeback ratios in order to comply with acquirer standards.
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Understand the Rules
Familiarizing yourself with rules can help you stay in the good graces of card networks and regulators. Privacy regulations like the California Consumer Privacy Act (CCPA) and the EU’s General Data Protection Regulation (GDPR) should be top of mind here.
For additional benefits, create a database or other system that outlines the required response for each type of claim. That extra can help you with strict representment response deadlines.
When creating and using your response database, it’s important to remember that reason codes are notoriously inaccurate when it comes to finding the true source of your chargebacks. You’ll still need to look carefully at each claim before you respond.
Going Beyond Requirements
Another way to make compliance a competitive advantage is by designing flexible policies that exceed requirements. The FTC’s “Click-to-Cancel” rule presents a good opportunity.
The FTC’s rule requires sellers to make cancelling a subscription as easy as signing up. But, what if you went one better by making it even easier to cancel than to enroll?
Including a cancellation link in every billing reminder, for instance, would satisfy the FTC mandate. At the same time, it also demonstrates that you’re confident in your products and committed to customer satisfaction.
In adopting a proactive stance, you can turn compliance from a cost center into a marketing asset, earn trust, and potentially even pre-emptively defuse disputes.
