The Top 5 Tips to Maximize Your Chargeback Win Rate
Your chargeback-to-transaction ratio offers insight on how well you prevent chargebacks. But what about the chargebacks you can’t avoid? How do you gauge the effectiveness of your chargeback response? The key is to examine your chargeback win rate.
Your win rate, sometimes referred to as a chargeback success rate, is distinct from your chargeback ratio. The latter measures your total monthly chargebacks as a portion of overall sales. In contrast, your win rate looks at how effectively you manage to fight—and win—against disputed transactions. It’s a measure of how effective you are at submitting successful representments and overturning chargebacks to recapture disputed charges.
- Chargeback Win Rate
A chargeback win rate is the rate at which a merchant disputes and successfully recovers transactions following an initial chargeback. This figure is expressed as a percentage of overall chargebacks.
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Win Rates Explained
So, how do you figure out your win rate? It’s actually rather simple…once you understand the basic process to dispute a chargeback, that is.
Let’s assume an issuing bank has questions about a particular transaction. The bank submits a retrieval request or transaction inquiry to get more information, and in response, you should submit the requested information. This can be conducted via the Visa Order Insights plugin (previously known as Visa Merchant Purchase Inquiry, or VMPI) for Visa transactions. Mastercard has their own similar process.
If the information submitted satisfactorily addresses the bank’s questions, the issuer can simply close the case. This will have no impact—positive or negative—on your win rate, because no actual dispute was filed. You satisfied the bank’s inquiry, so they simply dropped the matter.
The bank submitting an inquiry, then declining to dispute a charge is the best-case scenario. However, there could be several other potential results. The bank may determine that your information was insufficient, or they may even skip the transaction inquiry and file a chargeback if they believe it’s justified.
If the issuer files a chargeback, you have the opportunity to try reversing the dispute through a process called “representment.” If you manage to successfully fight it, the win will be reflected in your chargeback win rate. Obviously, your win rate will take a hit if you lose the dispute, or if you simply decline to fight it at all.
Maintaining a high win rate is a vital indicator for merchants. The higher your chargeback win rate, the more revenue you recover from disputes. Not only that, but a higher win rate may incentivize banks to conduct greater due diligence before filing a chargeback in the future. In that way, winning a dispute may help prevent the next chargeback to come after it.
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What’s a Good Win Rate?
As discussed before, you want your chargeback win rate to be as close to 100% as possible. That said, there’s not really a solid universal indicator for what constitutes a “good” win rate.
According to a report by CyberSource, merchants submitted a representment in 53% of chargebacks cases in 2016. Of those disputes, the report says merchants won the chargeback in question 41% of the time. This yields an overall average merchant chargeback win rate of roughly 22% of all disputes in 2016.
Merchants win fewer than one in four disputes? That’s not great. But of course, even this basic figure can be deceptively high, because your base win rate doesn’t reflect any additional steps in the chargeback lifecycle.
For example, you might win a dispute, only for the issuer to then file a pre-arbitration case. If that happens, you end up fighting another dispute, but it doesn’t improve your win rate, even if you win again. Of course, if you LOSE the pre-arbitration or arbitration process, the dispute will change from a “win” to a “loss.” In other words, additional stages beyond the initial representment could negatively affect your win rate, but can’t improve it. It’s the worst of both worlds.
Even under the best of circumstances, the dispute system is confusing, and that leads many merchants to write the process off entirely. Although you want your win rate to be as high as possible, some merchants don’t even bother with it. According to the 2018 State of Chargebacks, one in every four merchants didn’t even know their win rate.
Top 5 Tips to Improve Your Chargeback Win Rate
You may not be able to win every dispute, but you can act to keep your success rate as high as possible. Here are our top five suggestions:
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Prevention is the Best Solution
The above tips will help you maximize your chargeback win rate and recover as many sales as possible. That’s great…but preventing chargebacks wherever possible is always going to be your best bet.
We know that all disputes are products of either merchant error, criminal fraud, or friendly fraud. You can’t do much on your own to prevent friendly fraud; however, there are many things you can do to stop criminal fraud and merchant error.
Check out our free 35 Simple Steps to Prevent More Chargebacks guide. Inside, you’ll find plenty of easy, actionable tips to help retain profits, grow your revenue, and cut costs. Protecting your chargeback win rate isn’t easy…but preventing chargebacks can be.