Why Chargeback Management Outsourcing Is Good For Business

Why Chargeback Management Outsourcing Is Good for Business

Jen Lichner

Jan 13, 2021

As an online merchant, you probably consider chargebacks to be one of your most time-consuming and costly realities. When you receive a chargeback, the customer’s bank through no fault has already allowed it so the onus is on you to prove the transaction is valid which can be challenging. In fact, one-fifth of merchants (18%) indicate the complexity of rules for submission is their most frequent reason for losing chargebacks[1].

You can fight the dispute, but if the chargeback is successful, you could be at risk of losing much more than sales revenue.  Should you write off the chargeback as a cost of doing business? Doing so could help save you the cost of labor, resources, and time invested in gathering evidence and preparing a challenge. However, excessive chargebacks can wear away at your reputation with your merchant account and even have long lasting impacts to your brand.

Fortunately, chargeback management outsourcing solutions make fighting disputes easier and can provide a more strategic approach. Working with an experienced team of chargeback and fraud-prevention experts cannot only significantly reduce the number of chargebacks you receive but also helps you increase win rates, reduce operational costs, minimize losses, all while protecting your merchant account relationships and most importantly your brand. Simply put, chargeback management outsourcing allows you to concentrate your time and efforts on running your business, generating revenue and serving customers.

Here’s a preview of what you can expect when deciding if chargeback management outsourcing is a viable option:

Experience and Expertise

Working with a chargeback management outsourcing partner helps you increase revenue and relieves you of the burden of hiring or training employees and investing in the technology and infrastructure needed to track and respond to chargebacks.

A study commissioned by Accertify, and Javelin Research in November 2015 found that 73[2] of merchants that partnered with a chargeback management outsourcing provider increased workforce efficiency and productivity because employees can concentrate on tasks they are qualified and trained to do.

The Accertify team has years of experience managing chargebacks for companies in a variety of industries. This gives our team the perspective they need to understand your business process and devise a strategy to deal with the unique challenges you face.

Integration and Infrastructure

Contracting with a chargeback management outsourcing provider like Accertify allows you to tap into the knowledge, resources and expertise that our organization can offer.  A chargeback management outsourcing platform integrates with its fraud-management service to provide a comprehensive, end-to-end eCommerce solution that helps merchant’s reduce chargebacks and maximize win rates.

Chargeback management companies leverage their wealth of data and system resources to identify the types of disputes your company has the best chance of winning. By doing so, they can gather the evidence they need to combat both friendly fraud as well as customer service chargebacks, while also helping to minimize hostile fraud so you can proactively handle before it escalates to a chargeback.

By examining all incoming chargebacks, your service provider will gain perspective on the most common reasons customers file them. This will position them to recommend actions that can help minimize chargebacks.

Revenues and Ratios

The costs associated with chargeback fees, fulfillment operations, and lost merchandise can take a large percentage out of your profit margin. Eliminating these costs and maximizing revenue by preventing and winning chargebacks should be your company’s goal when opting in engaging a provider.  Additionally, if you select a service that includes an account verification component, it will help protect you from orders made via fraudulent logins and account takeovers. All these services will save you time and money.

A chargeback management outsourcing company can identify more chargebacks that can be successfully challenged because they have historical benchmarks to compare your business against. Pairing this with a streamlined and automated workflow that enables the service provider to locate, organize and respond quickly and consistently to chargebacks, puts you in a better position to win cases. This two-pronged attack—challenging more and challenging consistently—maximizes your win rate increasing returned revenues.

Effective chargeback management also includes preserving the health of your merchant accounts. Preventing chargebacks from being filed in the first place is a more ambitious and a more worthwhile goal in the long run. A key role of your chargeback management provider should be to ensure you maintain an adequate chargeback ratio – the percentage of purchases that result in chargebacks. Win rates do not mitigate chargeback rates, so if a merchant processes 1,000 transactions during a day and 120 result in chargebacks, the daily chargeback rate would be 1.2%.  Even if the seller wins every dispute case, the chargeback ratio stays the same. Keeping the rate below the various Card Network thresholds is critical. A chargeback ratio above that amount labels your business as “high risk,” which means you could face higher processing fees, fines, reserve funds requirements, and in some cases, loss of credit card processing rights.

Request a Consultation to learn how our chargeback management outsourcing service can help you minimize the number of chargebacks, boost win rates and improve your customer’s purchasing experience.