Chargeback Prevention

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Chargeback Prevention

What is a Chargeback?

Chargebacks occur when buyers their card issuing bank to dispute a transaction.  There are many reasons chargebacks occur.  Regardless of the reason, it’s important to keep chargebacks as low as possible to protect your payment processing accounts. 

Chargebacks can come from real fraudulent activity.  In these cases, businesses are targeted by cybercriminals who use stolen card information to purchase goods or services.   A more common cause of chargebacks is “friendly fraud” where buyers dispute a transaction to try to get product or service for free.  Chargebacks can also result when merchants do not provide the product or service as promised.  

To keep chargeback ratios within the limits required by the card brands it’s important to:

  • Prevent chargebacks before they happen
  • Manage chargebacks once they occur
  • Stop cybercriminals in their tracks with fraud-fighting tools

 

Preventing Chargebacks

Naturally, providing extraordinary customer service is the first step to preventing chargebacks.  Yet, no matter how good your customer service is, the risk of chargebacks remains.  Many consumers never contact you to complain.  Instead, they call their issuing bank & initiate a dispute. 

Early warning systems are your best defense to preventing chargebacks, helping you lower potential chargebacks up to 40%.  When a customer calls their issuing bank, you are automatically notified.  You can then refund the transaction before the dispute becomes a chargeback. You can set up rules to help you decide which types of transactions to refund.

Some merchants are resistant to giving customers refunds, particularly when the merchant believes the reasons for the dispute are incorrect.  Still, it is often better to simply initiate a refund rather than put your payment processing accounts in jeopardy.  Many high-risk merchants consider these types of refunds simply the cost of doing business.  

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Managing Chargebacks

Responding to and fighting chargebacks on your own is a daunting task. Each card brand has its own chargeback codes.  Each code must be responded to within a certain timeline and in a certain format.  The chargeback presentment system is complex.  If you do not respond, you lose.  Even if you do respond, you can lose on a technicality. 

It’s expensive to find and hire knowledgeable personnel to manage your chargebacks.  Your business is making sales, not managing chargebacks. The most prudent strategy to managing chargebacks is to outsource the process. 

Once you are enrolled in our chargeback management service, your merchant accounts are automatically monitored.  When a chargeback occurs, a file of evidence to fight the chargeback is compiled.  The response to the chargeback is submitted in the exact format required by each card brand.  Automated follow ups streamline the process.  All data is updated daily.  Cloud reporting gives you immediate access to the status of all chargebacks

Using a chargeback management service can help you win 40-90% of chargebacks, depending upon your industry & business.  Rates for the services are exceptionally low compared to the benefits you get.  


 

Chargeback Prevention with Fraud-Fighting Weapons

The PaynetSecure gateway includes extensive fraud fighting weapons to defeat cyber criminals.  A wide array of tools are easily customizable to meet the requirements of your business.   Enabling the robust rules & filters available in the gateway helps you automatically accept good orders, decline bad ones & set aside questionable ones for manual review. 

  • Risk scoring of transactions
  • Order velocity monitoring
  • Track buyers’ use of multiple payment types and brands
  • Card verification
  • Positive / negative consumer data from merchants worldwide
  • Address verification
  • IP geolocation
  • Device fingerprinting with packet signature inspection
  • Consumer history of initiating chargebacks
  • Internal positive / negative / review lists
  • Accept / block strategies
  • Methods to minimize international fraud
  • Prevent identity morphing
  • Chargeback retrieval & management tools
  • Consolidated data reviews and audit trails
  • Detect system intrusions &reconstruct events
  • Enhance security and assure payment processing system integrity
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