As eCommerce and digital payments continue to rise, another threat looms for businesses, chargebacks. While implemented to protect consumers from fraud, statistics indicate nearly one in five (17%) consumers admit to making false chargeback claims. Financial ramifications aside, chargebacks take time and expertise to deal with. Therefore, chargeback protection for merchants is essential to save time and money. This is where chargeback management tools come into play. Through innovative resources, chargebacks can be managed much more efficiently than ever before.
It is understood that the best way to prevent chargebacks is through direct communication with customers to resolve disputes before they become claims. This works best with legitimate chargeback claims. Unfortunately, other forms of chargeback exist, such as friendly fraud, which can prove costly to businesses. Not only does the business lose their products, but they are also hit with additional costs in the form of fees. It can be hard to detect illegitimate chargebacks, but luckily, chargeback management tools can help.
What are Chargeback Management Tools?
Chargeback management tools offer technological solutions designed to protect merchants from chargebacks. Their use case can range from chargeback fraud prevention to early detection, mitigation and management.
How Can Chargeback Management Tools Help Merchants?
Chargeback management tools are designed to make life easier for businesses. Simply put, investigating claims, gathering evidence and disputing cases takes time and effort. Chargeback management tools take care of some of or even this entire process.
Chargeback fraud prevention
Chargebacks can occur for a range of reasons (friendly fraud, merchant error, shipping issues). But chargebacks exist to refund customers for fraudulent transactions. Chargeback management tools can allow businesses to identify fraudulent transactions, giving them an opportunity to collect valuable insights. This information can be used in conjunction with other fraud prevention tools to provide protection against future fraudulent transactions. Therefore, chargeback management tools allow a holistic approach to be implemented in the defense against fraud.
Revenue recovery
Chargeback management tools can allow a business to understand the cause of a chargeback. Additionally, with instantaneous alerts when a customer requests a chargeback, businesses can locate what issues led to the chargeback and can help prevent future claims. Additionally, with early detection of disputes, businesses stand a better chance of offering recourse to customers through refunds; this can also lead to saving money in chargeback fees and penalties. Having a chargeback tool in place helps businesses stay two steps ahead, reducing revenues lost to further chargebacks, fees and costs.
Compiling evidence
When disputing a chargeback, evidence is required. The evidence must be substantial enough to allow banks to side with the business regarding the chargeback claim. Therefore, it’s essential that it’s done correctly. Finding the evidence needed requires expertise, and that’s where chargeback management tools can assist. Without having to spend additional time finding and compiling evidence, some tools can have the evidence readily available to be used to dispute claims.
Types of chargeback management tools
There are many types of chargeback management software available, and selecting one can be a difficult choice.
Here are some common options available.
Self-managed SaaS
This option is great if you’d like full control at an affordable cost. The SaaS application is usually purchased and integrated, and the technical requirements can be outsourced. This includes collecting evidence, analyzing data and fraud prevention. So while the tool may be cheaper, there is still a reliance on finding the human expertise to utilize the data correctly.
Fully managed automated solutions.
Conversely, for businesses that don’t have the resources to manage the entire chargeback process flow, then a fully managed automated solution can help. The process is outsourced, and a third-party provider will provide their expertise to defend against chargebacks.
Hybrid software
This type of software is the best of both worlds. Often available on a flexible per-service basis, businesses can gain access to expertise while still having complete control of the chargeback management process. This option may be more affordable than a fully managed solution; however, knowledge is still required for this to work efficiently.
Notable Chargeback Management tools
The two major card providers, Visa and Mastercard, offer partial chargeback management solutions.
Visa Verifi exists as a service to prevent and resolve disputes. Through its services, revenue can be saved, and sellers are better informed of confirmed disputes and fraud. In addition, as Visa Verifi has access to an extensive database of Visa cardholders, transactions that result in chargebacks elsewhere can be shared amongst all users of Verifi, thus providing early warnings of chargebacks if the same card is used for transactions elsewhere.
Meanwhile, Mastercard provides Ethoca. Using a mixture of alerts, high-quality analytics and transaction clarity, Ethoca aims to provide a means of chargeback fraud prevention and early chargeback detection. It does this by presenting information to businesses that can make identifying chargeback fraud easier to identify.
Another state-of-the-art chargeback management tool offering resources in the fight against chargebacks is Justt. The company offers a custom-made solution for every client, which is fully automated. With proprietary technology, using human expertise paired with machine learning, Justt better manages the chargeback process flow than the legacy solutions on the market. Moreover, with a pay-per-success based model, the financial risk to reward ratio is firmly in merchants’ favor. Justt handles the entire process of dealing with chargebacks, including evidence gathering, and with exceptional win rates, its service provides the best chargeback protection for merchants.
Final thoughts
As eCommerce continues to grow, so does the risk of chargebacks. It becomes clear why chargeback management tools are required to better manage and stay ahead of threats like chargebacks. It’s only through the use of these innovative tools that businesses are protected against the unnecessary loss of revenue.
