In-House Chargeback ManagementAre Merchants Better Off With a DIY Approach? Or is it Better to Get Third-Party Help?

February 26, 2024 | 10 min read

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In-House Chargeback Management

In a Nutshell

The approach you take to chargeback management should be determined by the specifics of your business. What’s the trade-off between in-house and outsourced chargeback management? Are those your only two options? This post explores internal chargeback strategies and how they compare to using a third party provider.

In-House Chargeback Management vs. Outsourcing: What’s the Best Option?

Chargeback management is a pretty broad topic. It can cover any number of strategies used to manage chargeback risk and, ultimately, prevent chargebacks from occurring.

Handling disputes in-house allows for substantial transparency and insight. After all, nobody knows your business as well as you do. At the same time, though, an in-house strategy can create problems that are hard to foresee (and even harder to overcome).

This raises the question: is in-house chargeback management the right choice for your business? Also, what’s the trade-off between in-house and outsourced chargeback management?

In this post, we’ll look at the ups and downs of in-house chargeback management. We’ll contrast it against other strategies, and help you decide which path is the best for your business.

What is Chargeback Management?

Let’s start with the basics.

First, we should clarify that “chargeback management” is an umbrella term. It doesn’t refer to any specific tool, tactic, or approach. Rather, it describes whatever strategy you use to control the impact or chargebacks on your business.

In other words: regardless whether you go for outsourced or in-house chargeback management, your strategy can involve a wide variety of different elements. But, at the end of the day, any good strategy must allow you to accomplish three key things:

In-House Chargeback Management

Identify chargebacks by their source

In-House Chargeback Management

Deploy solutions to prevent chargebacks when possible

In-House Chargeback Management

Fight back against invalid chargebacks

If your in-house chargeback management strategy doesn’t cover all three of these goals, then it’s not a viable solution.

Learn more about chargeback management

What Does In-House Chargeback Management Entail?

In-house chargeback management refers specifically to a strategy built on a “do-it-yourself” framework. This approach may include the use of third-party technologies. At the end of the day, though, you are the one in charge of  collecting and examining data, diagnosing risk factors and vulnerabilities, and deploying solutions.

There’s a lot of responsibility here. You’ll not only be in charge of all data collection and analysis, you’ll also be responsible for tracking down both internal and external chargeback data. Your team will need to research and deploy the most effective prevention solutions, see that they are implemented, and monitor their performance. Key operations include:

Chargeback Source Detection

There are dozens of reason codes used by card networks to outline the cause of a dispute. That said, all chargebacks can be grouped into one of three categories: merchant error, criminal fraud, and friendly fraud. Knowing the source of your disputes is crucial if you’re going to fight back effectively.

Deploying Fraud Detection

You need to eliminate the threat of criminal fraud attacks. This means developing a strategy using fraud scoring, card network verification tools, internal manual review processes, and detection processes. A multilayer strategy with redundancies will allow you to detect more potential threats.

Adopting Best Practices

You need to implement practices and procedures to stop disputes arising from errors and oversights. This requires an in-depth, end-to-end evaluation of your business. You need to review and rewrite policies as necessary. Every phase of the sales process must be checked for chargeback triggers.

Responding to Invalid Chargebacks

Want to fight back against an invalid claim? You need to create individual rebuttals for each representment case. This means researching the cardholder’s claim, compiling a body of evidence to prove that claim is invalid, and submitting your documentation on time; usually, you only have a few days to act.

Keep in mind that we’re just looking at broad strokes here. There are countless other operations that you may have to carry out in order to manage your chargebacks. So, while in-house chargeback management is possible, it’s not always an easy  — or cost-effective — option for every merchant.

“Pros” of In-House Chargeback Management

Taking a DIY approach does have its upsides. There are definitely some advantages to in-house chargeback management, including:



Perhaps the most obvious benefit: DIY chargeback management has a lower up-front cost than hiring someone to solve the problem. If you can manage the problem with your existing team and tech infrastructure, then there’s no need to make an extra investment.



If you work with a third party, that organization will require access to sensitive data. This may include customer information, transaction data, banking records, and more. In-house management means you’ll have more control over data security and safeguarding personal customer information.


Data Integrity

Relaying information to a third party means the data might be misinterpreted or received incomplete. This could result in a third-party vendor deploying the wrong tools or tactics, thereby wasting money and potentially making the situation even worse. In-house management lets you keep closer tabs on your customer’s data.


Protecting Team Members

If you already have staff to deal with in-house chargeback management, going with an outside source may mean eliminating some positions. That can streamline your operation and may look good on your bottom line. But, you may end up dismissing workers, which should give you some pause.

In-house? Outsource? The right answer is the one that gets the job done.REQUEST A DEMO

“Cons” of In-House Chargeback Management

In the other corner, there are definitely some downsides to in-house chargeback management solutions:


Lack of Expertise

A chargeback management service provider is going to have knowledge, expertise, and experience that you simply don’t. They’ll know how to maximize your return on investment while owning responsibility for compliance with network rule changes and data security updates. Meanwhile, you can focus on growing your business.


Inability to Analyze

As a merchant, you have intimate knowledge of your own internal data and operations. Professional chargeback management services, on the other hand, have access to more industry data, as well as the experience and expertise to interpret it. They can perform more informed diagnostic work and predictive analysis.


Limited Tools & Technologies

Building out your own chargeback management solution is a complicated, expensive process. By outsourcing chargeback operations, you gain access to all the tools you need in one place. You’ll have access to technologies that would otherwise be unavailable to you as “a la carte” offerings.


Incomplete Reporting

Chargeback reporting helps you gauge your success and determine how to allocate resources in the future. That only works, though, if you know what information to report on. Chargeback professionals know the most relevant stats and data to collect, giving you the insights you need to make the right decisions for your business.

Did You Know?!

technology, combining machine learning and human expertise to diagnose chargeback sources with pinpoint accuracy. This is coupled with relevant, easy-to-interpret reporting available from a customizable dashboard.

"Build AND Buy": Using SaaS & Other Offerings to Augment In-House Efforts

It’s true that outsourcing chargeback management is almost always more effective than handling it internally. However, there are still some benefits to in-house management. For some merchants, the answer is to identify which operations should be outsourced, and which can be handled in-house.

As modern fraud prevention becomes increasingly complex, you shouldn’t limit yourself to a “one-or-the-other” decision. Rather than think in terms of “build” or “buy,” you may be better served by asking: What outsourced products or services would complement my in-house skillset?

Take a hard look at your existing in-house chargeback management efforts. Segment what works… and what doesn’t work. Then, look for outsourced chargeback management solutions to complement the working elements of your strategy.

Outsourcing some responsibilities doesn’t mean losing control. In fact, everything you’ve learned from prior data acquisition efforts can still be used to help balance third-party efforts. While outsourcing all chargeback management may work for some businesses, others will see better ROI using a hybrid model.

Picking the Right Partner

There are a lot of chargeback management service providers on the market now. Whether you’re going with fully-outsourced or a hybrid strategy, picking the right partner can make all the difference in the world. So how can you go about finding the right fit?

Here are a few questions to ask before signing-on with any chargeback management solution provider.

  • What are the guarantees? What benchmarks can they offer you?
  • What are those guarantees based on? Does their past data substantiate the claims?
  • Do they offer reporting based on the stats and data you need?
  • If price is based on transaction volume, can you analyze growth potential well enough to budget accordingly?
  • Are there testimonials? Can you speak with current customers?
  • Is the solution adaptable and agile enough to support future trends and developments? Can it scale if your business grows?
  • Is the solution customizable to your unique needs?
  • Is their model informed by the real-world experiences of eCommerce merchants?

The market for customized software is growing. Achieving a customized solutions doesn't necessitate outsourcing, though. At Chargebacks911, we develop solutions with all the above — and more.

Our clients see better revenue retention and more efficient fraud detection and chargeback mitigation. We work closely with in-house management teams for customized integrations. We offer the most comprehensive, transparent, end-to-end outsourcing option available, all backed by the industry’s only performance-based ROI guarantee.

Contact us today to learn more about our solutions and how Chargebacks911 can help optimize your current mitigation efforts.


What does a chargeback manager do?

A chargeback manager is a specialist who implements chargeback policies and procedures to prevent chargebacks. They work to engage suspected friendly fraud attacks through representment and keep the business's chargeback ratio within an acceptable range.

What is the best way to handle chargebacks?

The first thing to do is put prevention tools in place to stop the problem from getting worse. Then you’ll need to dive in and find the sources of your chargebacks. Promptly address and contest invalid disputes. Implement strategies to prevent future occurrences by identifying and rectifying the underlying causes.

Do merchants usually fight chargebacks?

Preventing chargebacks and challenging invalid disputes may be the best things you can do to increase revenue and ensure the long-term sustainability of an online business. That said, data from the 2023 Chargeback Field Report suggests that nearly 75 percent said friendly fraud instances had increased in recent years.

Do chargebacks get investigated?

As a rule, banks are required to investigate and remedy any reported incidents of unauthorized actions on a consumer’s payment card. If the investigation points to friendly fraud, the chargeback will not be filed. If the bank is certain that a significant amount of fraud has occurred, it may turn the investigation over to law enforcement agencies.

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