Chargeback Alert Networks

For some merchants, chargeback alerts can be a crucial part of their chargeback management strategy, helping to keep their chargeback ratios below the critical thresholds for enrollment in dispute monitoring programs. However, choosing the right alerts provider can be tricky, especially since not all providers are completely honest about what’s going on behind the scenes.

To help you make more informed decisions about your chargeback alerts, let’s discuss how alert networks really work and how to ensure you’re getting the best coverage.

How Chargeback Alerts Work

Chargeback alert services reduce a merchant’s chargeback ratio by pausing incoming disputes before they become chargebacks, giving the merchant an opportunity to issue a refund instead. Here’s how the process works:

  1. A cardholder disputes a transaction.
  2. The issuer sends a notification to the provider through the alert network.
  3. The alerts provider either notifies the merchant or responds to the alert based on pre-determined rules.
  4. If the merchant is notified, they will have between 24 and 72 hours to respond.
  5. In most cases, the merchant or provider will issue a refund to prevent the chargeback.

The Differences Between Chargeback Alert Networks

Unfortunately, not all chargebacks can be prevented by alerts. The process only functions when both the issuing bank and the merchant are enrolled with the same alert network.

There are two chargeback alert networks: Ethoca, which is owned by Mastercard, and Verifi CDRN, which is owned by Visa. Most major U.S. banks are enrolled in both networks, but smaller issuers and banks in other countries may be enrolled in only one network or none at all.

One difference between Verifi and Ethoca is how they match billing descriptors. Alert networks use billing descriptors to match a disputed transaction to the correct merchant. When these billing descriptors are an exact match, either network will correctly associate them.

However, the two networks have different fallback solutions for when an exact match isn’t available. This often occurs due to processors or issuers truncating billing descriptors differently.

Verifi will seek to match a registered customer service number, which any billing descriptor should contain in full. Ethoca will instead try to match the first few words of the billing descriptor to find any that have been shortened.

Maximizing Chargeback Alert Coverage

While some merchants may choose to enroll in alerts with only one network, those looking to maximize coverage generally sign up with both. Merchants can enroll with Verifi and Ethoca directly, but this results in having to devote internal resources to manage alerts through two separate platforms.

Instead, many merchants sign up with a third-party alert provider. These providers are typically authorized resellers of both Verifi and Ethoca alerts, and may aggregate alerts from both networks into one system.

Because these providers facilitate access to the same alert networks, they will all have the same level of coverage.

The only differences in alert coverage involve specific situations where an alert’s details might not match the associated transaction. This can occur when only part of the purchase is being disputed, causing the chargeback amount to differ from the transaction amount. It can also occur when the date shown on the alert doesn’t match the date recorded by the merchant’s payment gateway. These dates can sometimes differ by up to three days.

Automation-only systems will often fail to respond to these alerts. However, some providers, such as Chargeback Gurus, will employ analysts that serve as a human safety net to ensure no alerts slip through the cracks.

Chargeback Gurus also provides additional benefits, such as:

  • Responding to alerts on behalf of the merchant
  • Managing Visa RDR notifications
  • Creating custom alert response strategies
  • Monitoring chargeback ratios for individual MIDs
  • Disabling certain types of alerts that don’t prevent chargebacks (TC40 and SAFE)

Conclusion

While alerts aren’t the right solution for every merchant, they can be key to preventing the hefty fines and fees involved in dispute monitoring programs like Visa’s VDMP and Mastercard’s ECP. For merchants whose chargeback ratios are in danger of exceeding the relevant thresholds (0.9% and 1.5%, respectively) chargeback alerts are usually well worth the cost.

Just remember, while the networks are the same no matter how you access them, the providers aren’t.

Choosing the right alert provider to partner with can make a big difference when it comes to minimizing your total cost of prevention while maximizing your results.

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