Chargeback SolutionChargebacks Cost Time, Money, & Energy. What’s The Solution?

Stop Disputes & Fight Friendly Fraud With A More Effective Chargeback Solution

Chargebacks cost merchants an estimated $54.5 billion globally in 2024. And, as if that didn’t sound bad enough, some new data from Mastercard suggests that things could get worse. 

Between 2025 and 2028, global chargeback volume is estimated to increase by roughly 24%, reaching 324 million annual disputes. And, with every $1 lost to fraudulent chargebacks now costing US merchants a record high of $4.61, it’s conceivable that chargebacks could soon be a more than $100 billion problem every year.

What can you do to protect yourself against this deluge of disputes? What chargeback solutions are available to you?

In this article, we’ll talk broadly about chargeback solutions and how you can manage your dispute risks. We’ll also explore how to compare options, what to look for in a dispute prevention solution, and what red flags to look out for before selecting a provider.

What Should a Chargeback Solution Help You Accomplish?

The best chargeback solution is the one that most effectively addresses your unique needs as a merchant. The best approach won’t be a “one size fits all” answer. That said, all effective solutions for chargebacks should accomplish a few key objectives:

#1  |  Identify the Sources of Your Chargebacks

Every chargeback you receive will be attached to a chargeback reason code. However, reason codes are not reliable indicators, as three out of four chargebacks are suspected cases of first-party chargeback misuse.

You can break all chargebacks down into three main categories: merchant error, third-party fraud, or first-party fraud.

If you don’t know the sources of your chargebacks, you’re basically fighting blind. With the benefit of this insight, though, you can develop a much more resilient strategy tailored to your unique needs.

#2  |  Stop Chargebacks From Happening

A chargeback solution must demonstrate measurable outcomes. The best (and most obvious) barometer of whether a chargeback solution is successful is whether it reduces the number of chargebacks filed against you. This can be measured by comparing your chargeback rate — the percentage of completed transactions that result in chargebacks — before and after adopting a strategy.

Once you’ve pinpointed the sources of your chargebacks, you can develop a strategy to see an immediate reduction in chargeback issuances. This can include tools like chargeback alerts and fraud scoring, as well as practices like optimizing customer service and billing descriptors.

#3  |  Reduce Your Long-Term Chargeback Risk

A good chargeback solution is proactive, not reactive. That means that your chargeback solution should help you identify and quash chargeback risk factors before chargebacks get filed.

For example, it’s considered a best practice to require buyers to input card verification values, or CVVs, when entering their payment information during checkout. Validating CVVs will go a long way to verify the legitimacy of a payment and help deter unauthorized activity. But, some merchants still do not require buyers to provide CVVs during checkout, leading to a heightened risk of chargebacks.

An effective chargeback solution, in this instance, would encourage merchants to ask for CVVs prior to payment. The solution would also identify other root causes related to chargebacks, such as merchant error, bad affiliate traffic, or convoluted cancellation procedures.

#4  |  Demonstrate a Positive Return on Investment

An effective chargeback solution is not free. Depending on the approach you take, your chargeback solution may demand significant resources. None of this is really a problem, though, as long as you see a return on your investment.

Finding a chargeback solution that proactively reduces the frequency or volume of chargebacks is only half the battle. The true test of whether a chargeback solution is “worth it” or not is whether it saves you more money and time than it costs.

#5  |  Be the Right Fit for Your Business

A “one-sized-fits-all” chargeback solution isn’t going to cut it. As a merchant, your line of business heavily influences the fraud risks you face. For example, if you run a credit repair shop, a digital subscription service, or operate in another high-risk vertical, you could face much higher chargeback risks than if you ran, say, a business-to-government (B2G) supplier.

Before settling on a chargeback solution, take a look at their case studies. Have they successfully worked with businesses that operate in your vertical? Can their sales or implementation team recommend specific fraud filters, settings, or tweaks tailored to risks in your vertical? Or, does it seem like they’re trying to push a generic, all-purpose solution?

How a vendor answers your tough questions can help you determine whether their chargeback solution is right for you. The same applies when looking at how far they’re willing to go to create a customized solution for your needs.

Selecting a Chargeback Solution: “Green Flags” to Look for

As we outlined above, a chargeback solution should help you accomplish five things: identify chargeback sources, stop disputes, reduce risk, demonstrate ROI, and adapt to your business. But, what a chargeback solution does, how quickly it works, and how much it helps your business is what separates an okay solution from a great one.

Here are some “green flags” that should help you identify a great chargeback solution:

As we mentioned before, every chargeback solution worth considering should demonstrate a positive return on investment. The best providers take this a step further: they should be willing to “eat their own cooking” by backing their ROI projections with a concrete guarantee.

In other words, if you implement a chargeback solution and don’t see the results you’re looking for, a top-tier vendor should be willing to waive fees or compensate you for ROI shortfalls. Doing so shows they stand by their chargeback solution and the results they claim it can achieve.

Implementation timelines vary depending on the scale and complexity of the chargeback solution you settle on. For example, small businesses pursuing Saas-based solutions can probably have something up and running within hours. By contrast, enterprises may be in need of solutions involving complex ERP integrations and data migration workflows. A realistic implementation timeline for this may be days (or even weeks).

It’s important that your solution provider is transparent about how long implementation will take, and be ready to work with you at every step of the way.

A rigid, one-size-fits-all approach to fraud detection is a sign of an inflexible or outdated solution. Providers that try to be forward-thinking use AI and machine learning to set fraud rules. In contrast, more traditional solutions use manual controls. The best chargeback solutions, however, offer a flexible, hybrid architecture.

A good solution will let you leverage machine learning to identify broad patterns and evolving threats. But, will still allow for granular control stemming from the ability to apply custom rules based on your unique business insights and industry knowledge. Adaptability ensures that your chargeback solution is as dynamic as the fraudsters you’re trying to stop.

A great chargeback solution doesn’t operate in a silo. Look for a provider that offers extensive, deep integrations across your entire tech stack; not just with your payment processor alone.

A chargeback solution that seamlessly connects with your eCommerce platform, CRM, inventory management system, and even your accounting software can help you create a powerful, unified ecosystem. Seamless integration allows for a richer flow of data, which sharpens fraud detection accuracy and enables automated workflows that save you time and reduce the risk of manual error.

General claims about reducing chargebacks or boosting ROI are easy to make. As mentioned before, the real test is whether a provider has a proven track record of success with businesses like yours.

Ask for performance data from merchants in your specific vertical; if you’re a subscription seller, for instance, then ask for a case study showing how the solution provider has produced an ROI for other subscription sellers. A provider who understands the nuanced fraud risks and customer behaviors of your industry will be far better equipped to tailor a solution that delivers meaningful results for you.

Selecting a Chargeback Solution: “Red Flags” to Avoid

Not all chargeback solutions on the market are going to work for you. In fact, some solutions may not even be worth considering at all.

Below, I’ve outlined a few factors that should be clear “red flags.” If detected, these should probably rule a provider out of your decision matrix:

A chargeback solution provider will handle sensitive customer and transaction data, so security is non-negotiable. At a minimum, a provider must be PCI-DSS compliant. They must also adhere to regional and state-specific data privacy regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). A lack of these certifications is an immediate warning sign that signals the provider may not take data security and regulatory compliance seriously enough to be trusted with your business.

The absence of a key integration is a clear problem, but a shallow integration can be just as bad. A weak connection that only syncs basic transaction data or fails to allow for a two-way flow of information will create data silos and require more manual work from your team. If a provider’s integrations don’t cover your essential tools or appear superficial, it suggests the solution in question will disrupt your workflows more than streamline them.

Data is only useful if it leads to better decisions. Your analytics should help you understand the root cause of your chargebacks; for example, by identifying which marketing campaigns, products, or geographic regions are most problematic. It’s a problem if you have a dashboard full of vanity metrics, but lack actionable insights. So, if a solution’s reporting can’t help you refine your fraud triggers and prevent future disputes, you may be better off walking away.

Even a single instance of a past data breach or known (but unpatched) security vulnerability should be a cause for concern. After all, if a vendor can’t defend themselves from fraud or cyberattacks, then it’s reasonable to doubt their ability to protect you and your customers’ data… let alone defend your business against threats like friendly fraud.

What Questions Should You Ask Before Selecting A Chargeback 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 solution provider:

SaaS vs. Full-Managed Chargeback Solutions: What Approach Should You Take?

Broadly speaking, merchants can choose from one of three chargeback solution types: self-management, software as a solution (SaaS), or a fully-managed outsourced solution. These solution categories vary in terms of price point, complexity, and effectiveness.

The Right Solution for You

It doesn’t matter if you need a fully-managed chargeback solution, or just some help here and there. Chargebacks911 has you covered. We challenge the status quo by proving how effective comprehensive chargeback management can be.

Chargebacks911 offers:

• Customized Solutions: A dual-layer approach that addresses both sides of the issue (prevention and representment) drives revenue recovery and reduces chargebacks in the long term.
• Effective Representments: Approaching the representment process from a data-driven, tactical angle will help recover revenue and drive long-term growth.
• Intelligent Source Detection: No more relying on chargeback reason codes. ISD technology lets you fight chargebacks based on the true reason, not just the reason code.
• Merchant Compliance Review: There are more than 100 potential errors and missteps that can cause chargebacks. Professional review lets you eliminate triggers that lead to chargebacks.
• Dispute Prevention: Stop chargebacks before they’re ever filed. Chargeback alerts ensure that you never get caught off guard by another dispute.

Chargebacks911 has what you need, when you need it.

We offer highly scalable chargeback solutions customized for any business, of any size, in any industry. Call us today and claim your free demo.