The volume of online and eCommerce transactions is rapidly increasing. In 2022, digital payments are expected to reach an overall value of $8.5 trillion, with a compounded annual growth rate of 13%. Consumers demand the convenience of digital channels, and that continues to boost sales for eCommerce retailers.
But as the number of online transactions grows, so do chargebacks. Merchant losses due to chargeback fraud have totaled a massive $125 billion, all within a single year. For retailers who rely on credit and digital payment methods, chargebacks present a significant problem to business profitability.
To help limit the many costs associated with customer disputes, you need to employ the right software. New technologies can help you detect and protect against fraudulent charges or false claims. As consumers move online, chargeback management software can ensure that the rising issue of chargebacks does not translate into lost revenues.
Let's look into chargeback management software and determine if it is a technical solution that can benefit your chargeback prevention strategy.
Chargeback management software refers to a suite of comprehensive technology-driven solutions designed to win and prevent chargebacks.
Each software service mitigates chargebacks by tracking and analyzing data. Collected insights can help you fix problematic business operations and intelligently address your chargeback response. For enterprises that cannot tackle customer disputes effectively through manual processes, third-party or automated service solutions can drastically optimize your chargeback prevention and resolution strategy.
There are different chargeback management solution formats available (self-managed, third-party provider, or combined integrations), each offering varying levels of control and support based on the requirements of your enterprise.
Chargeback management software centralizes useful dispute mitigation tools that streamline each aspect of the chargeback lifecycle. As a result, merchants gain several direct benefits that can positively impact the efficiency and costs of their chargeback systems.
Firstly, chargeback management software can defend against losses by reducing the impact of each dispute. Monitoring user data across a wealth of transactions with chargeback alert software allows you to deflect chargebacks the moment a customer contacts their bank. And by isolating the root cause of a repudiated charge, you are far more equipped to recover any lost revenues. Actionable insights can also improve how you approach and fight each dispute, leading to an optimized dispute process for potential future chargebacks.
The more often you can prevent instances that lead to customer disputes and quickly resolve any chargeback issues, the less revenue loss. By extension, you limit any chargeback fees and hidden costs associated with a repudiated charge.
Second, chargeback management solutions can automate aspects of your chargeback dispute strategy. Technical efficiency streamlines all business operations related to dispute resolution, leading to lower costs and less drain on critical resources.
For example, dispute teams can leverage the organizational benefits of a chargeback management tool for increased efficiency. Chargeback management solutions deliver transaction data that depicts operational issues currently contributing to potential chargebacks—with that information, support teams can take steps to remedy any problems (with far less manual work).
Some chargeback management tools also review current chargeback rules against previous dispute cases to determine possible areas of improvement. Over a large enough data sample, you can drastically alter the efficacy of all customer service. Decrease costs without jeopardizing the customer-to-business relationship.
While chargebacks occur for many different reasons (friendly fraud, merchant error, shipping issues), finding ways to limit instances of true fraud can protect against fraudulent revenue losses and will create a safer payments environment for your customers.
Chargeback management software solutions can aid your fraud defense tactics by utilizing collected insights to improve your integrated fraud prevention services. For example, a chargeback management tool will map out history logs and customer behavior records, information that can calibrate any detection tools according to the nuances of your business and client base.
Lastly, your chargeback management software can influence your revenue recovery by improving your win rate. All disputes require compelling evidence that matches the labeled reason code and can refute false customer claims. Submitted material must meet certain standards and remain issuer compliant, a task that is labor-intensive and time-consuming (especially if completed manually).
Chargeback management software can streamline your evidence compiling by syncing transaction disputes with original order information. Easy reporting can provide volumes of accurate and organized case information, and if you use a third-party service, their experts can utilize that information to efficiently minimize and reverse false claims. This will boost your win rate. When combined with fraud prevention and transaction monitoring tools, you can also effectively lower your chargeback volume over time.
As an additional benefit, fewer disputes also means you can maintain a chargeback ratio below 1%. That allows you to avoid higher transaction fees and the risk of being blacklisted by the credit card networks.
Each chargeback management software tool provides a unique set of features, support levels, and possible integrations. The best option for you will depend on how you plan to utilize the service within your current business operations. Some merchants prefer to self-manage, while others require a fully automated solution delivered by a third-party provider.
Let's look into the different types of chargeback management solutions to compare and contrast their pros and cons.
Self-managed solutions offer greater control and are an affordable way to integrate chargeback management tools. Many merchants will run purchased applications on-site themselves and simply outsource any technical requirements associated with particular service features (e.g. high-quality analytics, evidence collection, or fraud prevention integrations). It is a simple way to maintain a high level of supervision over the entire chargeback process (as long as you have the required manpower to operate any chargeback mitigation software).
If you want full control and can allocate resources to dispute resolution, self-managed solutions are a good option.
In comparison, some enterprises need comprehensive solutions that cover all aspects of their chargeback fraud prevention and dispute resolution. Outsourcing the entirety of your chargeback management strategy to a third party removes any need for an in-house mitigation team. Since resources diverted to fighting chargebacks hampers possible growth, employing a solution provider to manage your chargeback strategy can offer a good return on investment.
In addition, you can leverage the provider's expertise to improve system function within your specific business vertical. High-quality services incorporate artificial intelligence to further enhance and optimize all chargeback operations.
Third-party solutions usually cost more than SaaS tools until one factors in savings in overhead. For those who want to forget about the issue of chargebacks and limit resource usage, fully-managed chargeback management tools are the preferred solution.
You can always opt for a combination approach, where you employ specific chargeback management tasks as needed. For example, if you need higher levels of control over your chargeback management process but still want to gain the advantages of specific chargeback solutions (e.g. high-level analytics), you can integrate applications on a flexible, per-service delivery basis. It is a good way to manage costs while accessing the high-quality data tools, insights, and benefits provided by third-party solutions.
Not all businesses are the same, so choosing the right chargeback management software can turn into a uniquely complex process. Each chargeback management tool may focus on a different aspect of your chargeback process (defending against fraud, limiting dispute volume, or active dispute resolution)— your selection should reflect the exact needs of your chargeback mitigation strategy.
Most small businesses have a low chargeback volume, so a self-managed or hybrid service might be the best option. If you want a simple platform, helpful data analytics, and convenient mitigation tools, specific Saas integrations can function as excellent additions to your current chargeback prevention infrastructure.
For large-scale enterprises with extensive chargeback volume, a more robust and automated solution can provide the comprehensive coverage needed to effectively defend against chargeback fraud. Take advantage of insights gleaned by high-level artificial intelligence and the expertise of your chargeback management partner to optimize your success rates. Such support helps minimize customer disputes and recover revenues with minimal drain on your critical business resources.
Select the chargeback management software for your enterprise according to the features you need, how you hope to integrate any further technical applications, and the control you wish to have over your chargeback prevention strategy.
The issue of chargebacks will continue to grow as more consumers demand simple and convenient digital sales channels. For merchants, chargeback management solutions are an effective way to limit repudiated charges, raise dispute win rates, and improve fraud prevention efforts.
To fully capture the benefits of a chargeback management software, it is important to find a solution tailored to your business. That is why Justt is a fully customized chargeback mitigation solution— we leverage deep tech AI and our own extended expertise in dispute resolution to make unique solutions for your enterprise. We manage every aspect of the chargeback lifecycle, giving you a hands-off method of limiting repudiated charges. In addition, we operate with success-based fees, making Justt a risk-free solution ideal for large-scale enterprises that require comprehensive solutions to the problem of chargebacks.
Want to know more about chargeback management and how Justt can help your business recover revenues?