How to Choose the Right Dispute Management System for Your Business
Choosing a dispute management system for your business is a critical decision. Adopting the right tools and strategies can help you recover revenue, save time, and keep your business viable in the long term.
No system is perfect in every situation, though. A small business catering to a limited niche has different needs than a mega-retailer with millions of customers. It’s a delicate process because deploying the wrong dispute management software or processes means wasting considerable resources. In some cases, it may even make you more vulnerable to chargebacks than before.
The Purpose of a Dispute Management System
Chargebacks can be incredibly expensive if left unchecked. First, you lose your revenue, along with any merchandise you’ve already shipped. On top of that, you get slammed with added fees, higher overhead, and threats to your business sustainability.
As if that weren’t bad enough on its own, research suggests most chargebacks are illegitimate cases of friendly fraud. In fact, global merchants are expected to lose $50 billion in 2020 alone as a direct result of friendly fraud attacks perpetrated by cardholders.
It’s possible to manage disputes on your own. However, this becomes increasingly difficult and unmanageable as the number of chargebacks filed against you every month rises. This is where a good dispute management system comes in handy.
Your dispute management system has two fundamental purposes: reducing chargebacks wherever possible and recovering money from disputes that were filed without a valid reason.
Service providers offer different methods of addressing these two needs. For instance, some providers only offer alerts, which are meant to intercept disputes and allow you to issue a refund before the bank issues a chargeback. Other platforms offer fully-managed options, covering the chargeback process from end to end. Still, others lie somewhere in between, offering a combination of self-managed and fully-managed options for different components.
At the end of the day, your main goal is to protect your business. The challenge: it’s hard to determine which service—or combination of services—will best fit your unique needs.
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When it comes to dispute management, no one does it like the experts.
SaaS vs. Fully-Managed Service
A well-suited dispute management system will save you both time and money when compared to running your chargeback management through manual, in-house processes. Having the right software, tools, and tactics in place can help you:
- Allocate staff and other resources more effectively
- Gain better insights through more accurate reporting
- Identify and address developing threats
- See long-term chargeback reduction
But, as we mentioned above, there’s no “one-size-fits-all” solution that will work for every merchant in every situation. You’ll need to explore a number of fully-managed and software services to see which solution—or a combination thereof—would best reflect your needs.
A SaaS (software as a service) approach to the dispute management process is one option that more merchants are exploring. Here, you license dispute management software on a subscription basis, then use that software to facilitate chargeback self-management. In contrast, a fully-managed solution lets you simply outsource your chargeback operations to a third-party who will be accountable to you.
There are benefits to each approach. A SaaS-enabled dispute management system offers flexibility and a lower price point, making it attractive for small- to mid-size businesses. A fully-managed service allows you to be hands-off with chargebacks, trusting the experts to provide a better return on your investment while you focus your attention elsewhere.
You can also take a hybrid approach, adopting complementary components of a fully-managed and SaaS strategy. Some merchants choose to use software that automatically reviews chargebacks, then outsources the representment process to a third party.
The Right Solution for Your Unique Needs
Ultimately, the right dispute management system for you is the one that’s best adapted to your unique needs. For instance, if you only have a small handful of chargebacks every month, you should be able to work with an entirely SaaS-based approach. If you see hundreds of disputes monthly, though, a full-service option would be the most efficient and effective way to maximize your ROI.
Regardless of which path you take, there are a few things that should be baselines for your dispute management process. Most importantly, your system needs to be able to separate chargebacks by their fundamental source (merchant error, criminal fraud, or friendly fraud). This sounds like a relatively simple task but is usually quite complicated. If your system can’t accomplish this, then it can’t effectively manage your disputes.
Second, you also need to determine whether you’re more focused on intercepting or preventing disputes. With the former, you’re identifying disputes and resolving them before they become chargebacks. With the latter, you’re taking the initiative to identify and resolve issues that might cause future disputes.
Other important points to ensure are part of your system include:
Any automated process you employ should be based on dynamic, responsive, and complexly-structured rules.
Your tools and strategies need to grow with you. It’s ineffective to constantly redesign your processes every few months.
Your dispute management system should be compatible with your other technologies.
Accountability demands detailed, relevant reporting that can tell you what’s working … and what needs adjustment.
Are You Satisfied?
You should carefully review each of these items, optimizing your dispute management system according to what you’re trying to get out of it. Also, remember that the points outlined above are parts of an exhaustive list. There are dozens of potential data points to gauge the overall effectiveness of your systems.
Of course, all these determinations ultimately boil down to one fundamental question: are you satisfied with your return on investment?
Is it cost-effective to implement and maintain your process? If so, are you seeing the kind of ROI you wanted to see, given the time and energy required to research and implement your solution? Even if your system does deliver an ROI, that doesn’t necessarily mean you’re getting the best value.
At Chargebacks911®, we’re the industry’s leading experts in dispute management. We offer a multilayer strategy that’s customizable to your needs, available at a variety of service levels. Click below and learn how we can optimize your dispute management system today.