Ethoca AlertsEffective (but Limited) Chargeback Prevention

Ethoca Alerts: What They Are, What They Do, & How to Get Them

If you need to quickly get Mastercard chargebacks under control, Ethoca prevention alerts can be an extremely effective solution. So effective, in fact, that many merchants choose to rely on alerts as their sole means of chargeback prevention. 

That’s not necessarily a great idea, though. As we’ll see, alerts have great utility, but may not be a comprehensive chargeback management solution on their own.

In this post, we explain how Ethoca Alerts work, why there are multiple networks, and how merchants can leverage Ethoca to their fullest advantage. We’ll also explore the limits of the tool’s usefulness.

What are Ethoca Alerts?

Ethoca chargeback alerts is the flagship offering from Ethoca, a Mastercard company.

As the name implies, alerts serve to give you advance warning if a cardholder initiates a transaction dispute. That advance notification gives you a window in which to contact the customer directly, preventing the chargeback. Alerts work in real time, resolving disputes immediately, as opposed to taking several days or weeks might be the case with a chargeback. 

There are limitations, though. Ethoca Alerts only work with Mastercard chargebacks, and only if the issuer is part of Ethoca’s alerts network. While that network includes roughly 5,000 banks, a large number of them are located outside the US. Also, responding to an alert usually means you must refund the customer, regardless whether the buyer returned the goods purchased.

That said, alerts are still well worth considering. While refunding the customer is not an ideal solution, it still has less of a negative impact than receiving a chargeback. 

How Do Ethoca Alerts Work?

If the customer contacts the bank to inquire about (or dispute) a transaction, it’s likely the bank will file a chargeback. Normally, that means funds will be taken from your merchant account and returned to the cardholder.

If you’re enrolled in alerts, however, you could have an opportunity to remedy the situation. Let’s take a closer look at how that works:

• The buyer receives their purchase, but is dissatisfied for whatever reason.
• The customer bypasses you and contacts the issuing bank to dispute the charge.
• The issuer, a member of the Ethoca network, submits dispute details to Ethoca.
• Ethoca sends you an alert, notifying you of the pending chargeback.

Now, the ball is in your court. Upon receiving the alert, you have two options: agree with the dispute and refund the customer, or leave it alone and let it become a chargeback. In most cases, you’ll have 72 hours in which to determine how to proceed. Of course, the only reason to intentionally allow the chargeback to proceed is if the customer is in the wrong, and you intend to challenge the claim.

Benefits of Using Ethoca Alerts

Since chargebacks happen post-transaction, they are very hard to anticipate. But, Ethoca’s advance warning lets you insulate yourself against losses while attempting to pinpoint and correct recurring issues. Of course, that’s just one benefit they offer.

 Chargeback alerts from Ethoca also allow you to:

• Avoid Chargeback Fees: Merchants must pay chargeback fees for each chargeback. Alerts allow you to save funds that would otherwise be lost to these fees.
• Lower Your Chargeback Rate: You could see serious consequences if your chargeback rate exceeds allowable limits. Alerts ensure that this doesn’t happen.

• Protect Your Account: Crossing the chargeback rate threshold is bad. Failure to address the situation could lead your acquirer to terminate your merchant account.
• Save Resources: Challenging invalid chargebacks on a case-by-case basis diverts staff and other resources from the merchant’s core business.
• Protect Your Reputation: Uncontrolled chargebacks on your record can affect your reputation in the eyes of customers, and also make you seem like a risk to banks.
• Avoid False Positives: All chargeback alerts are tied to a pending chargeback that’s already in progress. There’s no risk that the network will flag transactions by accident.
• Prevent Order Loss: Some alerts may arrive before you complete fulfillment. If so, you may be able to stop fulfillment, refund the buyer and keep the merchandise.

• Reduce Future Fraud: Data and statistics from flagged transactions can be analyzed to fine-tune fraud screening programs and identify recurring problems.
• Improve Customer Satisfaction: Customers will see their issue resolved much faster through a refund than a chargeback.
• Allocate Staff More Effectively: Take some of the burden of chargeback management off your staff and let them refocus their energy on growing your business.

Combining Ethoca Alerts With Consumer Clarity

Chargeback alerts can deliver all the benefits outlined above. However, you can enhance your results and augment the effectiveness of Ethoca Alerts by also making use of Consumer Clarity.

Consumer Clarity is another product offered by Ethoca. Like alerts, it allows you to share transaction data to resolve claims in real time. However, it works by making additional customer, merchant, shipping, and other order information available to all parties in the event of a cardholder inquiry.

In many cases, the additional information provided may be enough to resolve the cardholder’s inquiry. In that case, the inquiry may be stopped before it even progresses to a cardholder dispute.

Learn more about Consumer Clarity

Is Ethoca the Only Company That Provides Alerts?

No. There are two major providers of chargeback alerts, including Ethoca (owned by Mastercard) and Verifi (a Visa company), which offer their Consumer Dispute Resolution Network (CDRN). 

Given their parent companies, it’s no surprise that Ethoca is focused on Mastercard disputes, while Verifi addresses Visa claims. Verifi has a smaller network of issuers; around 1,000 banks, compared to Ethoca’s 5,000 banks. However, most issuers in the Verifi network are US-based.

Another consideration is how the two products deal with matching claims to merchant billing descriptors. Either program will send notifications based on “exact match,” but  Ethoca looks for descriptors that begin with a certain phrase. In contrast, Verifi’s secondary search method is a registered phone number.

Another consideration is how the two products deal with matching claims to merchant billing descriptors. Either program will send notifications based on “exact match,” but  Ethoca looks for descriptors that begin with a certain phrase. In contrast, Verifi’s secondary search method is a registered phone number.

Pricing for Ethoca Alerts and Verifi CDRN are comparable. However, details may vary by business, especially when not working with a third-party facilitator.

How to Get Started With Ethoca Alerts

If you’re looking to get the most out of chargeback alerts, you’ll first need to analyze your needs.

You may work directly with Ethoca to receive alerts. But, if you’re like most merchants, you’ll probably find it more time- and cost-efficient to work with outside experts. The right platform can consolidate programs to deliver the widest protection coverage and highest cost efficiency while maintaining ease of use. 

Expert facilitators such as Chargebacks911® can offer alerts from both networks and provide more comprehensive coverage. You’ll enjoy:

• More effective protection created by combining both primary alerts networks with exclusive Cb911 relationships.
• Simplified operation, with all tools and navigation being accessible from a single, easy-to-use dashboard.
• Automated processes that deliver more accurate results by lowering the odds of human error.
• No limits or quotas, which might be encountered when working directly with alerts providers.
• User-friendly reporting based on extensive data collection and analysis, all accessible from the dashboard.
• No double payments. You will not be charged for receiving redundant alerts. Duplicates will be refunded.

Are Ethoca Alerts the Solution for Chargebacks?

Yes and no.

Ethoca Alerts are a great stop-gap measure to reduce chargeback issuances in a short period of time. That said, Ethoca Alerts weren’t designed to address why a chargeback was issued in the first place. They also can’t prevent lost sales revenue and merchandise resulting from a consumer dispute. Plus, while still considerably cheaper than a chargeback, alerts still come with a price tag.

Chargebacks911® has a wealth of experience-based knowledge and expertise in providing cost-effective prevention and risk mitigation strategies. Our experts can help you discover the true sources of all your chargebacks, and implement an end-to-end management strategy to retain revenue and prevent future disputes. Contact us today to learn more.