Comparing Chargeback Management Services
Chargebacks are a big problem for e-commerce retailers and other merchants. Wherever you find problems in the business world, you’ll find service providers offering solutions—some more effective than others. There are lots of third-party vendors out there with tools and services designed to help merchant manage their chargebacks, but every merchant’s chargeback problem is unique.
Some solutions will save you money and bring your chargeback rate down, others might do next to nothing to prevent the fraud and disputes that are having the greatest impact on your business. What’s the best way for merchants to compare chargeback management services and determine what they really need?
Every merchant needs to engage in chargeback management. To a certain extent, disputes are inevitable, but with the right tools and tactics, you can prevent many of them from becoming chargebacks.
You can even get illegitimate chargebacks reversed after the fact and reclaim your revenue. Chargeback management encompasses all of the plans, policies, and resources you’ll need in order to do these things effectively.
Unmanaged chargebacks can quickly overwhelm you. They deplete your revenue and saddle you with costly fees, and customers who succeed at obtaining free merchandise by exploiting the chargeback process will target vulnerable merchants again and again. Worst of all, card networks and acquirers monitor your monthly chargeback rate. When you exceed acceptable thresholds, you can be penalized with fines, remediation programs, and even the termination of your merchant account.
The good news is that the right chargeback management services can easily pay for themselves, generating positive ROI by preserving your revenue and helping you avoid fines and penalties.
What are Chargeback Management Services?
Chargeback management services help merchants prevent and respond to chargebacks. Some services are highly targeted, dealing with specific technical aspects of the chargeback process. Others may offer a more comprehensive approach.
Narrowly-focused chargeback management services include chargeback alerts and chargeback deflection, which give you an early warning about chargebacks and the chance to neutralize them by preemptively giving the cardholder a refund. Fraud protection can also fall under the aegis of chargeback management.
Comprehensive chargeback management services will often provide data analytics to help you determine the root causes of your chargebacks, respond to alerts and notifications 24/7, assist you with the chargeback representment process that is used to fight fraudulent chargebacks, and work with you to develop a chargeback defense strategy that reduces your overall risk.
When Do Merchants Need Chargeback Management Services?
Chargeback management is necessary for every merchant, and some merchants may have the time and wherewithal to handle it in-house. Third-party chargeback management services become necessary when merchants find they can no longer manage chargebacks on their own.
To manage chargebacks effectively, you need to be able to stay informed about the state of the chargeback process, respond to chargeback notifications within the allowed time frame, and make smart decisions about which chargebacks to accept and which ones to fight.
It’s also important to deal with the bigger picture of investigating chargebacks, which means analyzing their data and figuring out why they are occurring. If you aren’t being proactive about preventing chargebacks, you’ll soon find yourself facing a rising chargeback rate that could threaten the good standing of your merchant account.
Managing chargebacks in-house takes time and labor that merchants can’t always spare. At a certain point, it becomes more cost effective to outsource the job to a high-quality provider of chargeback management services.
How Should Merchants Compare Chargeback Management Services?
When comparing similar service providers, there are certain qualities that are always worth seeking out. Here are a few of the things that let you know you’re dealing with a reputable, high-quality company:
- Custom solutions, not one-size-fits-all. Every business is different, and a good chargeback management provider will have solutions that are tailored to your needs.
- Transparent billing policies. Some providers offer a low-cost sign-up, then hit you with unexpected charges and fees once you’ve committed to working with them. A trustworthy service provider should be clear about what kind of charges you can expect and submit detailed, itemized invoices that explain exactly what you’re paying them to do.
- Experience with your particular industry. Every business sector experiences fraud and chargebacks differently. Be wary of providers offering a one-size-fits-all solution.
- Strong data security protocols. Chargeback management services will be dealing with some of your most sensitive customer data, including personal information and payment credentials. You need to make sure they have strong policies and protocols in place to prevent any theft or breach.
- An extended trial period. If a chargeback management company is confident that they can help your business, they'll often offer an extended trial period so you can see the results of their services before signing a long-term contract.
If you’ve opted to hire a full-service chargeback management firm, you’ll also want to make sure that they have a sound methodology for analyzing chargeback data, readable reports that provide clear information about the fraud and dispute threats you’re facing, and a balanced strategy for preventing chargebacks ahead of time and fighting them through representment when necessary.
Merchants rarely get into the retail business because they’re excited about the prospect of dealing with payment fraud and customer disputes, but chargebacks are a problem that cannot be ignored. By availing yourself of the right chargeback management services, you can get your chargeback problem under control, protect your revenue, and free up time to focus on your most important business goals.