Chargebacks are a bane to business. It costs you money, spoils a customer’s experience, sullies your relationship with your payment processor, and leaves your books in a mess.
Introduction: What Are Chargebacks?
Chargebacks happen for a number of reasons, from basic fraudulent transactions to unhappy customers, misleading advertising, faulty products, confusing company policies, and basic merchant or technical errors. But the purpose of a chargeback is always the same: To reverse the charges of a transaction, reimbursing the customer by withdrawing the funds from your account.
But there are good business practices to help you reduce chargebacks. One of the most effective methods is to implement a chargeback alert system.
The Negative Impact of Chargebacks
Chargebacks are bad for your bottom line. They cause a direct hit to your finances, as not only are you losing the sale, but you may also be subjected to chargeback fees from your payment provider.
There are also serious longer-term repercussions to chargebacks, as unhappy customers are not in the habit of becoming loyal repeat customers. What’s more, bad word-of-mouth will further negatively impact your business’s reputation, making it harder to win new customers.
Additionally, if you’re getting too many chargebacks, you may have trouble finding a payment processor. Or, they may insist on higher fees due to considering your business a high-chargeback risk.
This is why a solid chargeback alert tool can save you money in the short term and reduce financial losses in the long term.
Benefits of Implementing Chargeback Alerts
If a customer has a problem, but at the same time wants to continue purchasing from a business, they will instead try and negotiate a refund directly with the business. Customers who initiate chargebacks can’t really be counted on in terms of loyalty.
That being said, there are some key advantages to setting up chargeback alerts.
Catch disputes early: Chargeback alert systems spot and alert you to any transaction dispute in real time, giving you the opportunity to resolve the situation and hopefully prevent the problem from escalating.
Reduce financial losses: Having a chargeback alert system can help a customer support department with dispute resolution won’t necessarily save you from having to refund the customer and avoid chargeback fees. It will help you, however, keep your ratios with Visa or Mastercard from being exceeded and thereby save you from paying even bigger fines.
Protect from fraud: If your business has been having a high amount of chargebacks, that may trigger fraud warnings with your payment solution provider or the authorities. That’s why it’s important to stay alert and deal with issues on your own before they get out of hand.
Implementing Chargeback Alerts: A Step-By-Step Guide
1. Select Your Key Transaction Data
The first step to implementing chargeback alerts is to identify which metrics to track when you analyze your transactions. These can include: transaction amounts, frequencies, and volume, chargeback ratios, decline rates, and location of transactions, among others. The idea is to trigger alerts based on your high-priority transaction metrics.
2. Choose Your Chargeback Tracking Tools
When selecting the right chargeback transaction platform, consider whether the software has the right features for your needs. The most important chargeback tracking software should include: real-time analytics, customization, automated workflows and robust integrations with other payment solution tools.
3. Connect Your Software Stack
If your chargeback alert tool is a standalone app, then make sure it integrates smoothly with your payment solutions. Syncing data and activity between systems is one way to ensure that you are alerted and notified of transaction disputes immediately so that you can resolve the issues before the chargeback occurs. This can be done via an open API or using a connector tool like Zapier.
4. Set Up Custom Alerts
Leverage customization on your chargeback system to prioritize alerts based on your key metrics, whether they are based on high amounts, transaction type, customer type, or historical precedents. You can also set up alerts through various communication channels, or have them specifically routed to the right agent for the job.
5. Build Workflow Automation
Workflows take over for some of the more repetitive human labor and they also ensure speedy or immediate actions are taken during crucial moments of a transaction. You can set up automated workflows to send responses and acknowledgments to payment providers, or to automate customer communication and refund processing.
6. Onboard Your Team
Any piece of business software is only as useful as the team that uses it. Make sure to give your team proper training so that everyone is not only familiar with all the tools and features, but that they understand the value such a system will add to their efforts in terms of saving time and reducing human error.
7. Track and Analyze Alert Activity
You can use chargeback alert software to produce regular reporting based on its analysis of your transactions. Basic monitoring should consider things like alert response wait times and resolution success-to-failure ratios.
8. Get Feedback for Optimization
Regularly check in with your team using the alert platform to understand what is helpful and what are their pain points. Based on this feedback, you can update and refine your custom settings, analysis parameters, alert workflows, and other procedures to maximize the usefulness of the tool.
Chargebacks for High-Risk Payment Industries
High-risk merchants must deal with the added business challenge of experiencing higher levels of chargebacks than businesses in non–high-risk industries. If you have a subscription-based business in the gaming, dating, gambling or adult entertainment industries, you are at risk of higher degrees of buyer’s remorse, ineligible customers, and vulnerability from fraud and scams.
The implementation of chargeback alerts for high-risk payment environments is therefore hardly a luxury but a business necessity.
There are many excellent chargeback management platforms like Centrobill that tailor directly to high-risk businesses, offering risk-management services like fraud prevention and strict refund policies. Send us a request to learn more.
Conclusion: Chargeback Alerts and Your Payment Solution
Summing up, chargebacks happen for a number of reasons, often without any fault on the part of the merchant or business. You can’t prevent 100% of chargebacks, but that doesn’t mean you should accept every single dubious one either.
In order to reduce the number of chargebacks, you need to leverage a chargeback alert system. Such tools help prevent individual chargebacks with early dispute detection, and cut down on future chargeback ratios through transaction analysis and actionable reporting.
In the end, this means fewer fees, more sales, better relationships with payment processors, and stellar customer satisfaction: core factors for promising financial gain.
