Proactive Chargeback Management

proactive reactive

Functioning in Reactive Mode? The Consequences are Severe.

There are two types of chargeback management, and the strategy merchants pursue will influence much more than just the bottom line—it will impact sustainability and longevity.

Reactive chargeback management might enable merchants to survive, but proactive chargeback management ensures businesses thrive.

Reactive Vs. Proactive

The difference between reactive and proactive chargeback management is more than just strategy, it’s also an entirely different mindset.


A reactive strategy means waiting until chargebacks become a significant liability and action must be taken. Reactive chargeback management is usually triggered when:

  • Revenue loss is so severe, sustainability has been threatened.
  • Fees and fines are considered excessive.
  • The brand’s reputation has been damaged with both consumers and industry members.
  • MIDs are lost.
  • Loyal customers have switched to the competition.
  • Revenue holds are implemented and restricting cash flow.
  • There aren’t sufficient funds to pay operating costs.

The severity of the situation might vary by merchant, but what prompts the action is usually very similar: mounting risks that weren't prevented and are now causing severe consequences.


A proactive approach, on the other hand, employs predictive analysis to identify potential threats and avoid significant consequences.

Proactive management acknowledges that chargebacks are an inevitability for any eCommerce business. It is based on the understanding that chargeback rates will eventually rise if nothing is done to manage them.

Rather than waiting to witness the extent of the chargeback problem, it is best to have a plan in place to mitigate risk before it happens. A proactive strategy objectively analyzes the merchant’s skillset and operations to detect vulnerabilities and implements a customized solution to address that business’s unique challenges.

Creating a strategy before it’s needed ensures merchants won’t be tempted to settle for whatever reactive help is available and cost-effective in the moment.

What Defines a Strategy as ‘Reactive’?

How can merchants identify if they’re reliant on reactive solutions and practices? Merchants are in reactive mode if they:

  • Rely on chargeback alerts to avoid liability, rather than create a comprehensive strategy to prevent transaction disputes from happening.
  • Employ blacklists to ban fraudsters after they’ve already attacked once, rather than preventing the unauthorized transactions.
  • Only dispute big-ticket chargebacks to limit excessive revenue loss, rather than effectuating long-term change by improving the merchant’s reputation and challenging faulty consumer behavior.

These are just some of the techniques that are characteristic of a reactive philosophy. Any attempt to minimize risk that generates short-term results instead of addressing the underlying problem would be considered a reactive strategy.

Operating in reactive mode? Contact Chargebacks911® today. Our free chargeback analysis can identify opportunities to transition to a proactive chargeback management mindset.


What’s Wrong with Reactive? Why is Proactive So Important?

Merchants who are overly-reliant on reactive chargeback management will find themselves perpetually one step behind—they’ll never get ahead of the problem.

Thus, the longer a merchant relies on reactive strategies, the worse the underlying problem will be and the more severe the long-term damage to the merchant’s organization. It’s possible the merchant isn’t even aware of the damage until it is too late to fix it.

While a reactive merchant will perpetually be one step behind, a proactive merchant will remain one step ahead, gaining a significant competitive advantage. Proactive chargeback management allows merchants to:

  • Retain more revenue
  • Increase profits
  • Preempt threats
  • Identify new monetization opportunities
  • Maintain customer loyalty
  • Reduce processing costs and fees
  • Reduce operating expenses

How Can Merchants Transition to Proactive Chargeback Management?

There is a time and place for reactive solutions, but this mindset should never be a merchant’s primary course of action. Reactive tools, like alerts and blacklists, can be incorporated into a predominantly proactive approach.

Transitioning to proactive chargeback management involves the following:

  • Immediate action: When it comes to chargeback management, time is of the essence. Merchants need products and services that produce immediate results. Integrations should be quick and efficient. For example, Chargebacks911 offers both non-technical and API integration options, meaning merchants can be up and running in as little as 30 days.
  • Identification of chargeback sources: Unless merchants identify and rectify problems at their source, they’re simply treating symptoms—a reactive strategy. Chargebacks911’s Intelligent Source Detection™ determines what caused the chargeback and how to mitigate future risk.
  • Eradication of merchant error: As much as 40% of chargebacks are caused by undetected and unresolved merchant error. Part of a proactive chargeback management strategy means reviewing policies and procedures on a regular basis to detect issues that could lead to transaction disputes. Merchants have found Merchant Compliance Review to be helpful with that.
  • Critical analysis regarding areas of need: Merchants need to objectively analyze abilities and potential weaknesses to determine what level of assistance is needed. What can be managed in-house and what should be outsourced? How can professional assistance increase efficiency?

These are just some of the basic components of a proactive strategy. Each business is different and requires a customized approach to chargeback management.

If you are interested in replacing your reactive strategy with a proactive approach—and reaping all the financial rewards—contact Chargebacks911 today. Our specialty is dynamic strategies that evolve in tandem with the emerging challenges of modern eCommerce. We’ll make sure you always remain one step ahead—of both threats and the competition!

Prevent Chargebacks.

Fight Fraud.

Recover Revenue.