Chargeback Prevention Alerts | 2022 FAQ
Table of Contents
- What Are Chargeback Prevention Alerts?
- How Do Chargeback Prevention Alerts Work?
- How Much Do Chargeback Alerts Cost?
- What Are the Benefits of Chargeback Prevention Alerts?
- Who Are the Major Providers of Chargeback Alerts?
- Is Verifi or Ethoca Better for Chargeback Alerts?
- Is There a Difference between Verifi and Ethoca Chargeback Alert Fees?
- Can I Sign Up with Both Verifi and Ethoca for Chargeback Alerts?
- What Percentage of Chargebacks Can Be Prevented by Alerts?
- What Do I Need to Get Started with a Chargeback Prevention Alert Network?
- How Long Does It Take to Set Up Chargeback Prevention Alerts?
- Should I Let a Chargeback Management Company Handle Chargeback Alerts for Me?
- Are Chargeback Alerts the Best Way to Prevent Chargebacks?
- What Happens If I Get Too Many Chargebacks?
- What Is a High-Risk Merchant?
- What Happens If I am Labeled a High-Risk Merchant?
- What Is a Chargeback Threshold?
- What Happens If I Lose My Merchant Account?
What Are Chargeback Prevention Alerts?
During the chargeback process, the cardholder typically works with their issuing bank, and the merchant never knows about the dispute until they are notified about the chargeback after the fact.
But with a chargeback alert, you can get a notification of a pending chargeback in process. In this case, you get the opportunity to reach out to the customer and manage the dispute outside the payment system. This means that you can also potentially avoid a chargeback for, at most, the expense of a refund.
How Do Chargeback Prevention Alerts Work?
If the merchant believes the request is invalid, they can always opt to let the process play out and dispute the chargeback.
How Much Do Chargeback Alerts Cost?
What Are the Benefits of Chargeback Prevention Alerts?
Merchants have to pay fees for chargeback prevention alerts, but in the long term, paying those fees can be a lot more cost-effective than dealing with the expenses and lost revenue associated with having your account suspended or terminated.
Who Are the Major Providers of Chargeback Alerts?
Is Verifi or Ethoca Better for Chargeback Alerts?
Is There a Difference between Verifi and Ethoca Chargeback Alert Fees?
Can I Sign Up with Both Verifi and Ethoca for Chargeback Alerts?
What Percentage of Chargebacks Can Be Prevented by Alerts?
- Transaction Count (The more transactions, the better the coverage)
- Customer Bank Location (US customer base has better coverage than overseas)
- Years in Business (Established businesses can have better coverage than new merchants)
What Do I Need to Get Started with a Chargeback Prevention Alert Network?
- Merchant/Business Name
- Business Registered Address
- Merchant Account Descriptor (Name as it appears on customer credit card statement)
- Merchant Account Number (The ID provided by your payment processor)
- Access to your Sales System (To issue refunds and resolve the alerts)
How Long Does It Take to Set Up Chargeback Prevention Alerts?
- New Merchant: 45 – 60 days (Haven’t processed any transactions before)
- New Customer: 20 – 30 days (Never enrolled in a prevention alert network before)
- Existing Customer: No delay (Previously enrolled in prevention alerts, but switching providers)
Should I Let a Chargeback Management Company Handle Chargeback Alerts for Me?
This way you never have to worry about failing to respond in time—whereas, when a merchant signs up for alerts directly with the networks, the burden of resolving the alerts falls on the merchant.
Some chargeback management companies offer the ability to manage alerts from both networks through a single intuitive dashboard instead of logging into each company's portal separately.
A chargeback management company may even offer a 100% chargeback prevention guarantee when a prevention alert is handled. This means if chargeback still occurs after the merchant responded to the alert by issuing a refund, the management company will refund 100% of your alert fee. Lastly, a chargeback management company may charge the same fee you'd get by enrolling with the network directly.
Are Chargeback Alerts the Best Way to Prevent Chargebacks?
What Happens If I Get Too Many Chargebacks?
Businesses labeled as high high risk are typically enrolled in dispute mitigation programs that may impose additional fees for chargebacks. If a merchant remains in such a program for too long, large monthly fees may be added, and the merchant's acquirer may choose to terminate the merchant account.
When this occurs, the merchant is added to the Terminated Merchant File (TMF), which makes it challenging to get a merchant account from any other payment processor.
What Is a High-Risk Merchant?
What Happens If I am Labeled a High-Risk Merchant?
If a merchant has been designated as high risk due to a high chargeback ratio rather than because of the industry they operate in, this high risk status can be removed by maintaining a chargeback ratio below the threshold for a few months.