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How to manage Disputes, Claims and Chargebacks

How-to-manage-Disputes- Claims-and-Chargebacks

For the long run of a successful business with good revenue, a merchant should understand the need for chargeback management and master it. For better management of chargebacks, a merchant should avail facilities like chargeback alert services and chargeback prevention services. No matter how experienced the merchant is or has an efficient team, it is impossible to nullify chargebacks, because of which it becomes important for the merchant to have knowledge about how to manage disputes and claims so as to minimize its impact on the annual revenue.

How to Manage Chargebacks
Most of the e-commerce merchants, not having complete knowledge about chargeback management, treat chargebacks as liabilities and make ineffective attempts to win disputed chargebacks. Instead, the merchant should have a proactive approach and knowledge of chargeback management to successfully dispute chargebacks and increase the success rate.

Major components of chargeback management
The two main components of an effective chargeback management are:

  • Prevention
  • Representment

If a merchant lack in any of the components, it will affect chargeback management plan and the result will affect revenue. Let us now understand these two components and its importance.

1. Chargeback Prevention
Revenue is directly affected by the rate of chargebacks filed against the merchant. Lesser the chargebacks, better the revenue. To manage chargeback efficiently and effectively, preventing chargeback is an initial step. Few things that a merchant should follow to prevent chargebacks are:

  • Minimize/eliminate errors at front and back end, both
  • Authorization request
  • Contact chargeback management team or issuing bank for any suspicious activity
  • Validate transactions
  • Share contact information (Contact number or E-mail id) and communicate effectively
  • Don’t make false promises
  • Follow network rules and regulations
  • Consider payment mode and methods
  • Well trained customer care team
  • Clear and easy refund policies

2. Chargeback Dispute and Representment
Although chargeback prevention is much easier than chargeback representment, does not mean that merchant should only focus on prevention. No matter how effective and well-planned prevention technique merchant adopts, chargeback occurs and every merchant should be able to dispute chargebacks when filed. It is important to understand the reasons for chargebacks in order to analyze and dispute chargeback efficiently. Reason code for a chargeback is categorized into three groups:
i. Merchant error
ii. Criminal fraud
iii. Friendly fraud

Manage Disputes and Claims
In order to successfully dispute frauds, chargeback manager should perform following responsibilities:

  • Maintain record history
  • Keep track of chargeback notification arrival
  • Make a decision whether to respond to chargeback or not
  • Respond within chargeback time limit
  • Understand the chargeback reason code
  • Effective communication with the cardholder
  • Gather appropriate evidence
  • A well-crafted rebuttal letter
  • Follow up
  • Check merchant’s business bank account at regular intervals

Drawbacks of Unprofessional Chargeback Management
It is advisable to hire a professional chargeback manager, as without professional help merchant might lose more money due to ineffective chargeback management and this will affect the longevity of the business. Few of the shortcomings of unprofessional chargeback management are:

  • Identifying the root cause of chargebacks
  • Planning effective and proactive chargeback strategies
  • Much time spent in dwelling records
  • Understanding the terms used by the card network
  • Limited resources (time and money)
  • Limited access to the necessary technology

Need help?
If you need help in creating better and effective chargeback management system, give us call on +1(855) 465-4723 or write to us on app@chargebackexpertz.com Our team will conduct ROI analysis to give you a complete package of managing chargebacks and improving revenue.

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