Guide to Automating Chargeback Responses

January 17, 2020

January 17, 2020

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Chargebacks are debit or credit card charges that have been disputed by customers. Sometimes these come in the form of chargeback fraud, but other times they are legitimate. When a chargeback happens, you have to deal with the acquiring bank and other entities in order to dispute it. Regardless of the reason for any given […]

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Chargebacks are debit or credit card charges that have been disputed by customers. Sometimes these come in the form of chargeback fraud, but other times they are legitimate. When a chargeback happens, you have to deal with the acquiring bank and other entities in order to dispute it. Regardless of the reason for any given chargeback, there are tons of benefits to automating your company’s responses to them. After all, chargeback representment—the process of trying to reverse a chargeback—is something all businesses will have to deal with at some point. This brief guide will tell you what automated chargeback responses are, how they work, and how to use them when transactions are in dispute.

Why Automate Chargeback Responses?

The first question is, why automate chargeback responses at all? The answer is simple: efficiency! The dispute process will be much more manageable and consume fewer of your resources if you can automate it. Not only does automation make you more efficient, but it reduces errors for increased accuracy as well. An automation system also increases transparency by making it clear where responses are coming from. Fewer errors, quicker turnaround, and more transparency means saved money and better outcomes—and fewer chargebacks overall.

Eliminate Costly Manual Tasks

Rote, manual tasks like chargeback responses take up an enormous amount of time. Your employees’ talents are best put to work elsewhere! Automation of dispute handling allows you to make better use of your human resources. And since you won’t have to pay a human to manually respond to each chargeback, you can put away more revenue. Automation also collects data such as the number of cardholder chargebacks, and which products or services are leading to the most chargebacks. This data is extremely valuable, and an automation system can collect and interpret it quickly and efficiently. Error-free reports can then be generated from the data without the need for employees to mess around with tedious spreadsheets. The bottom line? You reduce costs and make better use of your workforce!

Remove Mundane Tasks

As we mentioned earlier, one of the most valuable aspects of automation is that it frees up your human employees from doing tedious, mundane tasks. You hired them because they’re talented and amazing, so chances are, there are lots of projects you’d rather have them working on than chargeback responses and data entry. Employees freed from these kinds of mundane tasks will be more satisfied, more engaged, and more productive. They’ll be more passionate and connected to the mission of the company, and to the spirit of excellence you’re trying to create.

Common Errors with Manual Chargebacks

Doing chargeback responses manually comes with a slew of potential errors. Here are some of the most common mistakes:
  • Alerts not processed in time: When alerts aren’t processed in a timely-enough fashion, your chance to prevent the chargeback will expire. When this happens, you’re out of options—you just have to eat the cost of the chargeback, plus any fees charged by your payment processing partner and/or bank.
  • No one notified the vendor: If the vendor isn’t properly notified, you could pay double. You’ll lose revenue from the sale, and will eat the cost of the product or service that was provided to the customer.
  • Refunding an expired alert: If a chargeback alert expires, and then a refund is still issued, you will have to pay double for the mistake.
  • Future billings aren’t cancelled: If a customer has automatic billing, future billings will have to be cancelled. If they aren’t, you are likely to have to deal with the same chargeback the following month.
  • The customer isn’t flagged: After a chargeback, the customer should be flagged and blocked from making future purchases. If this doesn’t happen, they are likely to be the source of more chargebacks in the future.

Common Errors with the Manual Chargeback Reporting Process

In addition to dealing with the chargebacks themselves, chargeback reporting is an important part of the process. Information like the chargeback reason code, which tells you why a chargeback occurred, needs to be recorded. Real-time data is critical to effectively fight chargebacks and ensure dispute resolution. When reporting is completed manually, a host of errors can crop up that make the problem worse. Here are the most common ones:
  • Unhelpful data: One of the biggest pitfalls of manual chargeback data reporting is that you end up with too much data, or lots of data that just isn’t valuable. This noise makes it hard to reap any benefits from your reporting of reason codes, products ordered, and other information.
  • Miss out on important data: It’s easy to miss out on important data when you try to do all the reporting yourself. The risk is especially high when you have tons of unhelpful data muddying up the big picture.
  • Incorrect document submission: If documents aren’t submitted correctly, the person processing the chargebacks might not even know they exist. This results in errors and tons of missed data that could be valuable.

Final Thoughts

Chargeback disputes have potential to cost you thousands of dollars or more, and the chargeback response process is rife with potential for mistakes. Occasional consumer disputes and credit card chargebacks are inevitable, but with chargeback prevention measures, you can at least reduce chargebacks even if you can’t eliminate them. When they do occur, however, automation reduces the risk of all of the most common pitfalls. Even if you have to make an initial investment in an automation system, the money and time you’ll save over the course of your business could be astronomical. That’s why every company should be taking full advantage of automation to help them handle customer disputes. Consider using a chargeback management software platform to help with the process. These, and other chargeback management services, can help you automate when there is a chargeback request, flag suspected fraudulent transactions, send a notification when one is detected, and more. The costs of these platforms are usually well-worth what you’ll save, by preventing chargebacks and dealing with them swiftly!

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