August 19, 2016
To improve your bottom-line results e-commerce merchants need to implement a holistic chargeback-management solution that not only prevents chargebacks, but also actively reclaims lost dollars to fraudulent chargebacks. Verifi recommends six best practices for successful chargeback management:
1. Improve Internal Processes
Merchants should optimize several internal processes to minimize chargebacks. For example:
- Gather information you need to build your case when representing chargebacks.
- Improve customer service by making it easier for customers to contact your company. Consider extending hours of operation making it easier to reach a live person by reducing hold times and automated menu options. You don’t want customers to get frustrated, hang up and choose to call their issuing bank instead.
- Institute internal fraud monitoring that includes monitoring IP addresses or high-value transactions to prevent fraudulent chargebacks before they occur.
- Use chargeback notifications to learn quickly when a customer is disputing a charge. Notifications enable you to address chargebacks proactively without tightening up fraud control so much that you turn away good customers.
2. Prioritize Which Chargebacks to Fight and Represent
Whatever you do to prevent chargebacks, they will still happen, so you need to identify those that are most worthy of being fought and represented based on the expected ROI. Each dispute takes time and carries a fee from your acquirer. Consider the return on time and money spent and pick your battles carefully.
3. Gather and Analyze Chargeback Data
Monitor your chargebacks and determine where you should take preventive measures. Make sure you separate your initial chargebacks from those that remain after you represent them. You need to understand the “why” behind each chargeback. Why are they occurring? Why aren’t you winning them when you represent them? Insights gained help you minimize chargebacks and maximize representment win rates.
4. Make Billing Clear
Some chargebacks occur because customers don’t recognize charges they receive. So be as clear as possible and make it easy for the consumer to contact you and jog their memory about a purchase. Include the URL or customer service number in the descriptor field on bills.
5. Fix Problems in Operations
Your chargeback data can be a treasure trove of information about problems in operations. Analyze the chargeback codes you see most frequently and what might cause the problem. For example, perhaps you have a high percentage of chargebacks due to “merchandise not as described.” If so, it may indicate your website’s product descriptions and images are not descriptive enough. Or, maybe your product quality is not up to consumer expectations.
6. Outsource to the Experts
Chargeback management is time consuming and can divert resources from your core business. To be effective, it takes deep expertise and requires you to keep up on all the latest rules for chargebacks. Many merchants find the best solution is to outsource the task to a third party that’s 100 percent focused on chargeback prevention and management. This solution often achieves the highest return on investment, enabling you to reduce risk, be more efficient, and improve your bottom line without the chargeback management headaches.
Frank Stornello is Chief Marketing and Strategy Officer of Verifi , a leading provider of global electronic payment and risk management solutions since 2005. Frank has over 25 years’ marketing and executive-level experience. Prior to joining Verifi, he was President of a large marketing services firm where he became one of Verifi’s first clients. Having experienced first-hand how a comprehensive fraud mitigation program improves profitability, he is passionate about helping other companies boost their bottom-line results.