Thriving in a chargeback world
Some merchants simply treat chargebacks, re-presentments and everything that goes into dispute resolution as an unavoidable cost of accepting cards. But with a smart, informed chargeback strategy, businesses can ensure that they are preserving the most value for their company. Checkout.com’s robust suite of tools helps merchants prevent and seamlessly address chargebacks whenever and wherever possible.
Chargebacks. They’re a part of card acceptance that merchants love to hate. Of course, they reflect consumer protection regulations in many countries and they have been a part of card scheme rules for years. But this still doesn’t change the fact that they’re a hassle, a pain, a cost – call it what you will – for merchants. As a form of consumer protection against fraudulent merchants, the bank can force a reversal of a card transaction and take money back from the merchant. Unfortunately, many legitimate merchants are also paying the price.
Here are some things merchants should know to streamline, reduce, and combat chargebacks.
1. Know your business model
Step one in thriving in a chargeback world is knowing your business model.
Your chargeback strategy should be informed by the number and nature of chargebacks you receive. So, what proportion of your chargebacks are service- or fraud-related? How many arise from a failure to follow proper authorization procedures? Having this data on hand can inform your payments, chargeback and broader strategy to help mitigate future chargebacks.
Not obtaining authorization, processing a sale with an expired, stolen or fraudulent card, or submitting a transaction more than once could all result in a dispute. While this is easy to fix, either with staff training and automatic alerts, you’ve got to have the data in the first place.
The Checkout.com Disputes API offers a better way to handle disputes by simplifying the disputes workflow. If you have evidence to prove that the transaction was legitimate and wish to contest the dispute, you can simply submit evidence directly via the API. With Checkout.com, all is definitely not lost if you receive a chargeback, especially not the funds.
2. Stay ahead of your chargebacks
It’s one thing to be wise after the event. But prevention is often better, cheaper and less painful than the cure. Step two in thriving in a chargeback world is anticipating possible disputes. Our Disputes API gives you an overview of all your disputes in real-time as well as detailed information about specific disputes. Use the information to enrich your fraud models as the reports may reveal trends that were previously missed.
We also offer our Account Updater service to prevent you from losing sales or missing payments due to your customers’ cards expiring. We will automatically update expiring cards, helping you maximize revenue, reduce churn and the manual work of prompting customers for new card details. The service is available to merchants in the EU or US who tokenize their cards with Checkout.com.
3. Pick your battles
Step three in thriving in a chargeback world is picking your battles. Understand which chargebacks you can contest and the costs of doing so. Also, consider your risk tolerance for disputes, which may differ by sales channel, business line or geography. For example, if you operate in a sector where there’s a gap between taking orders and delivering goods, there’s potential – almost unavoidably – for higher chargebacks compared to sectors with immediate fulfillment.
Our Disputes API provides recommended solutions and advice on how to respond to each dispute, helping you with case-by-case decision-making, resolve disputes faster and reduce the administrative costs involved. Our webhook notifications also provide status updates, enabling timely and effective decision-making, plus helps with root cause analysis and crafting follow-up procedures to prevent recurrences.
How Checkout.com can help
The Checkout.com Disputes API allows customers to build their own interface around our API for faster, more automated dispute resolution. To find out more, contact our team of payment experts today, visit our Disputes API Documentation or contact your Customer Success Manager for more information.
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