Chargeback Analyst: In-House or Outsource?


Should Your Company Hire an In-House Chargeback Analyst or Outsource to a Professional?

For many merchants, chargeback management is an essential task. Without proper prevention and dispute practices, chargebacks will steal revenue, increase risk, and threaten the business’s longevity.

However, only a highly trained chargeback specialist can ensure a successful management system.

The Role of a Chargeback Specialist

If not properly managed, chargebacks can threaten a business’s ability to process credit card transactions. If a business experiences excessive chargeback levels, the acquiring bank could simply terminate the merchant account. An eCommerce merchant can’t survive without the ability to process credit card payments.

Additionally, high-dollar chargebacks, merchant account reserves, and chargeback fees can create serious cash flow issues.

Effective chargeback management can only be executed through a chargeback specialist. Some of the responsibilities of a chargeback specialist include:

  • Carefully reviewing the policies and regulations set forth by the card networks. Both Visa and Mastercard have highly detailed manuals that outline the guidelines merchants must follow. These manuals, filled with complex industry terminology, are regularly updated. A chargeback analyst is tasked with reviewing these updates and implementing the necessary changes.
  • Reviewing the business’s policies and practices. A great portion of chargebacks are caused by merchant error. A chargeback specialist can help identify the actions causing transaction disputes.
  • Identifying and preventing potential fraud. Fraud detection and prevention requires an intelligent and aggressive approach. A chargeback analyst will need to validate suspicious activity and personally review transactions flagged as fraud to avoid false positives (and revenue loss).
  • Analyzing risk. New fraud techniques are constantly emerging. A chargeback specialist must be able to identify potential risks before they become liabilities and create innovative strategies to protect the business.
  • Combatting chargeback fraud. This unique threat is something most merchants are ill-equipped to deal with. Disputing illegitimate chargebacks should be a top priority.
  • Disputing chargebacks. The most effective chargeback disputes are those crafted with human intelligence. A chargeback specialist will devise a personalized response to each chargeback.
  • Ensuring sustainable growth. A chargeback specialist will identify the best practices that ensure maximum profitability with minimal risk.

If you’ve determined your business needs a structured approach to chargeback management, the first task is determining who will oversee chargeback issues when they arise. Should your business appoint an in-house chargeback analyst or will the job be outsourced?

The Pros and Cons of an In-House Chargeback Analyst

Because chargebacks create financial distress for the business, many merchants are hesitant to outsource the task. The extra expense doesn’t seem practical.

If you find yourself in this position—struggling with cash flow issues—it is possible that you are only reviewing the pros of hiring an in-house chargeback analyst. However, you should consider both sides of the coin.

Pros of DIY Chargeback Management Cons of DIY Chargeback Management
  • For most small businesses, chargeback management won't be a full-time job. The chargeback analyst can help with other in-house projects.
  • If the task of chargeback management is assigned to a current employee, there won't be additional expenses.
  • An outsider won't be privy to sensitive company information.
  • The merchant will be involved in each stage of the chargeback process, knowing exactly what is happening and when.
  • You will be focused primarily on the past instead of determining how to grow your business in the future.
  • The rules and regulations instigated by the networks are constantly changing. Without a thorough understanding of the networks' expectations, your prevention and representment efforts will have a very low success rate.
  • The evolution of technology means new threats will continue to emerge. These threats could seriously damage your business before you are even aware of the risk.
  • Partnership with chargeback mitigation firms is the only way to receive alerts (instead of chargebacks) for unauthorized transactions.
  • Your prevention efforts aren't objective enough. You can't accurately analyze your business's practices and policies to determine chargeback triggers.
  • There isn't enough information publicly available to educate in-house chargeback analysts about tactics for managing emerging threats—like friendly fraud and affiliate fraud.

Outsourcing: A More Profitable Option

Studies show in-house chargeback specialists are only capable of preventing and disputing a small percentage of chargebacks. They can manage the “low hanging fruit.”

However, professional chargeback managers (like Chargebacks911®) have a much higher success rate. Outsourcing the task to a chargeback specialist means the merchant is able to successfully prevent and dispute the low hanging fruit plus prevail in most challenging situations.

Additionally, a truly professional chargeback manager will provide a return on your investment (Chargebacks911 guarantees ROI). When it’s all said and done, there might not be much to show for the vast amount of resources used by an in-house chargeback analyst.

If the idea of completely outsourcing to a chargeback specialist makes you feel less in control of your business, perhaps a gradual approach is more palatable.

Options for Outsourcing to a Chargeback Specialist

There are various options for outsourcing the task of chargeback management. As your confidence in a chargeback specialist grows or your business expands (you are experiencing new threats), you’ll want to consider the pertinent options. Below are several levels of commitment.

Outsource Level: Minimal

Would an on-demand system help ease the process of outsourcing to a chargeback manager? It’s possible to manage the bulk of your chargeback issues in-house, but get help from a professional when you need it.

What's Included Who Can Benefit
An on-demand management solution means you can take advantage of the services you need—and nothing else. This option is best for merchants who aren't ready to fully outsource their chargeback management, but need help on occasion.

Interested in outsourcing to a chargeback specialist to receive on-demand assistance?

Outsource Level: Moderate

This is another great option for merchants who are interested in maintaining some control.

What's Included Who Can Benefit
An automated solution with risk management intelligence to help recover losses in uncomplicated disputes. This option is best for merchants with a robust quality control department to ensure merchant error is not the primary culprit of chargebacks.

Interested in outsourcing to a chargeback specialist to receive self-service solutions?

Outsource Level: Complete

Merchants who are interested in winning as many chargeback disputes as possible or reducing their chargeback ratio need a full-service solution.

Fully outsourcing the task of chargeback management ensures the longevity of the business by reducing risk, retaining revenue, and recouping losses. A turnkey solution with end-to-end accountability and guaranteed ROI offers the best value to merchants.

What's Included Who Can Benefit
A turnkey solution manages everything from prevention to disputes. Merchants can rest assured knowing a fully customized approach will meet the needs of their business while ensuring the highest win-rate possible. This option is best for merchants who are considered "high risk" or want to retain as much revenue as possible. This outsourced solution offers the most ROI.

Interested in outsourcing to a chargeback specialist to receive full-service solutions?

Who will be Your Business's Chargeback Analyst?

Will you hire a chargeback analyst to work within your company or will you rely on the expertise of a professional?

If you are still unsure about the best approach for your business, let us conduct a free, no-obligation analysis. We’ll determine how much more you could earn by partnering with Chargebacks911 as your chargeback specialist. You really have nothing to lose; if we can’t improve your bottom line, we won’t recommend our services.

Prevent Chargebacks.

Fight Fraud.

Recover Revenue.

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