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Your Chargeback Management Program and Its Influence on ROI

A chargeback is a transaction reversal that the cardholder's bank initiates, and they are the bane of many merchants’ existence. They eat into revenues and can threaten a business’s very livelihood.

The chargeback concept has its roots in consumer protection as it represents a shield between customers and unscrupulous merchants. However, even honest sellers can get caught up in chargebacks and trying to reverse them. By utilizing an efficient chargeback management system, companies can benefit from a healthy ROI (return on investment). Here is why:

Data analysis

There is no such thing as useless data, as it reveals important trends that a company owner should be aware of and use for improvement purposes. Chargeback data is no exception, as it can reveal flaws and weaknesses in your company's processes. Fixing these 'hidden issues' can help you reduce chargebacks in the long-term.

Chargeback analysis will reveal reasons for these transaction reversals. Many business owners discover that the predominance of their chargebacks come from goods not being delivered. This should not happen if logistics processes are in place. There are several ways to analyze chargeback data, including reason codes such as the example above, country, and product type.

Live monitoring

To manage chargebacks successfully, the company needs access to real-time data as this allows its team to identify problems and deal with them so that they do not worsen. This data needs to be consolidated and then integrated with other company information so that it does not become siloed as an afterthought.

Too much data can seem overwhelming, and you need to sort the wheat from the chaff. However, as a KPI, chargeback management should feature strongly in your daily, weekly, and monthly data analysis.

Be alert

If you are thinking about implementing chargeback management services here is another reason why you should, according to the experts at Accertify Chargeback Management. With the correct systems in place, you can receive alerts about chargebacks that allow you to prevent them. Up to 30% of chargebacks can be stopped before they happen, with real-time information making it possible.

If the merchant reimburses the cardholder within 24 hours of the transaction dispute being reported, it avoids the chargeback. For this to work effectively, the company needs to receive alerts 24/7 to ensure they act on chargeback notifications before they start incurring costs. It might be worthwhile automating some reversals, depending on the reason, to take advantage of the 24-hour time limit.

Contest chargebacks

Illegitimate chargebacks are quite common and will cost the company much money if not managed efficiently. However, it is pointless going in heavy-handed and fighting every chargeback received. A more strategic approach is to weigh which ones you have a reasonable chance of defending successfully. The process is time-consuming and therefore has financial implications and will affect ROI.

Low amount chargebacks cost more to defend than they are worth, as do chargebacks that have exceeded the 24-hour time limit. When it comes to the chargebacks you elect to defend, ensure that you have adequate and compelling evidence. Otherwise, the matter could degenerate into a prolonged and costly process.

Chargeback efficiency

With labor costs being what they are, some companies find it too costly to deal with chargebacks themselves. This has led to several chargeback management companies springing up to manage this process for these companies.

It is an ideal solution for businesses that do not experience large volumes of chargebacks. With the technology and experience at their fingertips, these companies offer greater efficiency and higher success rates in reducing chargebacks. Their services might require spending money, but potential ROI will cover this expense.

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