Chargeback Companies
Chargebacks are not a problem that merchants can afford to ignore. Not only do they drain your revenue with transaction reversals and costly fees, they can also cause you to lose access to your all-important merchant account. An out-of-control chargeback problem can also be a sign of greater issues with customer service, fulfilment, product quality, and other critical aspects of a business.
Chargeback prevention companies can be a great help—provided you pick one that knows how to handle the specific fraud and dispute issues your business is facing. What do merchants need to know about choosing the right chargeback prevention company?
- What are ACH Return Codes?
- What ACH Return Codes Should Merchants Know?
- What are the Consequences of an ACH Return?
- Conclusion
Merchants who have experienced the sting of chargebacks hardly need to be reminded of what an expensive and damaging problem they can be. Every chargeback you receive brings revenue loss, chargeback fees, and an uptick to the chargeback ratio that acquirers and card networks are constantly monitoring.
When your ratio reaches a point where they consider it “excessive,” you can end up in chargeback remediation programs that come with even more fees and the risk of having your merchant account terminated.
Chargebacks are also a bellwether for problems that can hurt your reputation with your customers. Too many true fraud chargebacks could mean that you aren’t doing enough to protect current (and potential) customers from cybercriminals.
Merchant error chargebacks speak to unaddressed problems with your essential business processes. Even friendly fraud can be a signal that you aren’t addressing customer complaints in a prompt and satisfactory manner.
Chargebacks can spring from a wide range of root causes and often result from underlying issues that may not be obvious at first glance. Hiring the right chargeback company can provide a significant return on investment, but selecting one isn’t always an easy decision.
What do Chargeback Prevention Companies Do?
Chargeback prevention companies help merchants protect themselves from true fraud and fraudulent chargebacks, and provide assistance with the chargeback representment process that allows merchants to recover their disputed revenue.
The chargeback process is complicated, with lots of specific rules for different situations. Each card network has their own set of chargeback policies and reason codes, and they frequently change them.
Chargeback companies can assist merchants in navigating these processes, and work with them to develop a comprehensive chargeback prevention strategy. These companies can also handle the entire representment process on behalf of the merchant, typically achieving a higher win rate than an in-house team.
When is it Time to Hire a Chargeback Management Company?
Preventing credit card fraud and fighting fraudulent chargebacks take up a lot of a merchant’s time and labor. Many merchants simply don’t have the resources to deal with chargebacks properly without hiring outside help.
Merchants often try to handle chargebacks in-house, but as sales volume increases, so do fraud and disputes. Even when merchants have staff available to tackle chargeback issues, it can be difficult to make headway without direct knowledge and experience of the many nuances of each card network’s chargeback rules.
The right chargeback prevention company can provide positive ROI, reduce your chargeback ratio, and provide analytics that help you reduce future revenue loss.
What’s the Best Way to Choose a Chargeback Prevention Company?
The best way to choose a great chargeback prevention company is to know what qualifying criteria you need to look for. Here’s what the right chargeback company should be able to offer:
Experience working with businesses in your industry.
Different industries have different chargeback issues. A high-volume retailer and a niche service provider might be getting disputes for completely dissimilar reasons, and a one-size-fits-all strategy is never going to provide optimal protection.
A reliable methodology for determining the root causes of chargebacks.
The only way to effectively prevent chargebacks is to understand why they’re happening and where they’re coming from. The right chargeback company will use data analytics and detailed reporting to understand these root causes, enabling you to take specific targeted actions to address them.
Equal focus on both prevention and representment.
A strong chargeback defense strategy is both proactive and reactive. Some chargebacks, such as true fraud, are valid when filed and can only be prevented ahead of time—by the time the chargeback notification arrives, it’s too late to stop them.
Other chargebacks, such as friendly fraud, are hard to anticipate ahead of time, but they can be reversed through the chargeback representment process. You need a chargeback company that can expertly handle both scenarios.
No sign-up fees
Good chargeback prevention companies will provide positive ROI by helping merchants lower their chargeback rate and recover their revenue from friendly fraud and other illegitimate chargebacks. They don’t need to make money from merchants by charging them huge up-front fees.
A commitment to data security.
Chargeback management companies are often required to sift through sensitive customer data and other protected information in order to determine the root causes of chargebacks and analyze the facts of specific disputes.
If they don’t have adequate safety and security protocols in place, their work can put you at risk of a serious data breach. The right chargeback company will have extensive safeguards in place to protect the integrity of their clients’ data.
A completely transparent billing process.
Chargebacks can be complex and confusing, but the invoice from your chargeback prevention company shouldn’t be.
A reputable company will always explain all of their fees and charges ahead of time, and should provide detailed and easy-to-understand invoices that tell you exactly what you’re paying for.
Excellent service.
Time is of the essence when it comes to dealing with chargebacks, especially when you’re counting on your chargeback prevention company to respond to inquiries and alerts. The right company will always answer your calls and emails promptly with expert help.
Conclusion
Because chargebacks pose such a clear and present danger to the financial health of a merchant, it makes sense to use the best and most effective resources you can find to mitigate the problem. When you take the time to find a chargeback company that really understands what they’re doing and how to help businesses like yours, you can face down even the most overwhelming challenges with fraud and disputes.
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