7 Serious Benefits You Should Expect from Your Chargeback Solution
Chargebacks are a pain. But if you’re looking for a chargeback solution…you already know that. In this article we're going to talk about some of the challenges merchants face when mitigating chargebacks. We'll also discuss the top 7 metrics merchants should use when evaluating the valididity of a chargeback solution.
Each individual chargeback eats up time, money, and other resources. Staff are diverted to deal with the dispute, meaning they’re focused on recovering lost revenue, rather than generating new revenue. You can try to fight the chargeback, but the deck is stacked against you from the start: the bank has already accepted the customer’s claim, so it’s up to you to demonstrate why that claim is false.
It can feel like a no-win situation... but what else can you do? You have three fundamental options regarding chargebacks:
#1. Do Nothing
You can try ignoring the problem. Of course, ignoring persistent chargebacks won’t make them go away. In fact, the problem will only get worse. There are many practices and behaviors that cause disputes; by ignoring the problem, you’re letting those chargeback triggers go unaddressed. That will only cause the situation to deteriorate further.
#2. Fight Chargebacks on Your Own
You can engage in DIY chargeback management. This is much more difficult that it sounds, however, for multiple reasons. First, chargeback rules are complex. Processes will vary based on the card scheme, and are liable to change at any time. Second, each dispute requires individualized attention; your time and energy should be spent growing revenue, not recovering it. Finally, your chances of winning are dismally low, with fewer than one quarter of merchants surveyed winning a majority of their disputes.
#3. Invest in a Chargeback Solution
Rather than ignoring chargebacks, or trying to manage them on your own, you can turn your disputes over to experts. Professional chargeback management takes care of recovering revenue and long-term chargeback reduction, so you can focus on maximizing revenue and eliminating waste.
In most cases, hiring a chargeback solution is your best bet. According to a Chargebacks911® case study, one retailer saw an 18% reduction in chargeback issuances and a 200% increase in chargeback recovery after just 30 days of Chargebacks911 service.
The 7 Benefits of an Outsourced Solution
As you might expect, not all chargeback solutions are created equal. So it’s important to know what benefits you should expect from a reliable chargeback management service like Chargebacks911:
Benefit #1: Revenue Recovery
Every chargeback filed means more revenue loss. Even if you manage to win a dispute, you still lose the cost of administration, plus the chargeback fee. The best way to recover revenue from chargebacks is to prevent them.
You can offset loses with a chargeback management service that both disputes friendly fraud chargebacks on your behalf and takes steps to eliminate chargebacks caused by criminal fraud and merchant error. You recover revenue, while stopping future losses before they happe
Benefit #2: Lower Operating Costs
There’s one fundamental question to ask yourself when you consider hiring a new service: will this save money? If the answer is “yes,” then it’s a wise investment.
Outsourcing your dispute management to a company that guarantees your ROI means you can reduce expenses by introducing more effective chargeback responses and processes. You can reallocate staff, trim unnecessary expenses, and gain more effective results.
Benefit #3: Responsiveness
The online marketplace is dynamic, fast-moving, and always evolving. You need to be as responsive as possible if you’re even going to survive ... let alone thrive. That’s difficult, though, when you’re trying to manage a constantly growing set of threats.
An outsourced chargeback solution offers the benefits of specialized expertise. It allows you to be agile and responsive to changes in the industry, without the need to consistently monitor technology changes and track policy updates on your own.
Benefit #4: Increased Net Income
Beyond just recovering revenue you’ve already earned, an outsourced chargeback solution can actually increase income. Plenty of merchants use fraud scoring to identify and decline potential fraud transactions. That seems good, but the reality is that only 8% of the $118 billion in declined sales in 2015 were true fraud. The remaining $109 billion were all false positives.
Better fraud targeting and chargeback management will stop illegitimate disputes without impacting sales. You can accept more transactions and generate income without fear of seeing your dispute rate spike.
Benefit #5: Better Relationships with Customers
As we alluded to earlier, there’s a fine line between reasonable fraud prevention practices, and undue friction that slows down the customer experience. You should fight friendly fraud chargebacks, absolutely; what you don’t want to do, however, is fight legitimate disputes. If you do, you’re essentially calling consumers liars…after they’ve already been victims of fraud.
With the improved fraud targeting offered by outsourcing your chargeback solution, you can dispute bad chargebacks without impacting customer retention or accidentally fighting genuine disputes.
Benefit #6: Protect Your Merchant Account
Chargeback prevention isn’t only about recovering revenue and protecting your bottom line in the short term. If your chargeback ratio gets too high, your acquirer can terminate your account, making it impossible to accept payments or conduct operations.
Eliminating chargebacks—without impacting sales—is the only way to keep your chargeback ratio at a healthy point. Thus, deploying a viable, long-term chargeback solution is a cornerstone of merchant sustainability.
Benefit #7: Optimize Your Data
You’re fighting an uphill battle with in-house management, since that approach only gives you access to internal data. In other words, you’re trying to deploy a comprehensive strategy with very limited information. You can offset that lack of insight, though, with help from professionals, who have a much wider range of data to work with.
Don’t rely solely on your own statistics; doing so limits your scope and creates the potential for errors and oversights. Instead, take advantage of the years of data, research, and experience to which chargeback management companies have access.
An Outsourced Chargeback Solution Is Your Best Bet
No strategy is perfect, of course; there’s no way to “guarantee” you’ll never see another dispute. But, working alongside chargeback management professionals is your best bet for protecting your revenue stream and preventing unnecessary loss.
Can your current chargeback solution offer the benefits listed above? If not, it’s time to talk to the pros. Click below and get started with a free overview of Chargebacks911’s services. And learn how much you stand to save.