How to Choose the Right Chargeback Management Company

July 5, 2021/ Jarrod Wright /

Effectively managing chargebacks requires time, expertise, and the necessary amount of manpower. Many merchants struggle to successfully manage chargebacks on their own and enlist the services of a third party.

Chargeback service providers, or chargeback management companies, offer differing levels of management, including anything from simple consulting to advanced end-to-end chargeback prevention services. Hiring a third-party chargeback company offers merchants multiple benefits, such as reducing the number of chargebacks they receive and challenging illegitimate chargebacks.

Merchants must ask the right questions when evaluating which service is best. They should look for a company that offers everything they currently need and also addresses the possibility of future issues.

Here are the six most important questions for merchants to consider.

1. Do I really need professional help?

Even though all businesses have some capacity to manage chargebacks in-house, having access to the tools isn’t the same as effectively implementing them. Attempting in-house management will require merchants to master the following capabilities:

• Read, analyze and interpret thousands of pages of complex industry regulations.
• Stay up-to-date with the constantly evolving changes in regulation and adjust their process accordingly.
• Keep track of all changes in compliance requirements of card networks, processors, financial institutions, and government agencies.
• Look beyond the reason codes to identify the source of each chargeback and recover the most revenue without responding inappropriately.
• Create professional, compliant, and accurate dispute cases.
• Monitor internal policy issues which might trigger chargebacks.

Evaluating these areas will help determine whether a chargeback company is needed. The key is to identify areas of weakness in each process, and then outsource those responsibilities.

2. What should a chargeback management company help me do?

The two most important issues to address are prevention and representment. The goal of chargeback management is to prevent as many chargebacks as possible, and there are a number of tools available to accomplish this. Chargeback alerts, for instance, are an important tool used to help prevent certain types of chargeback claims.

Representments work at the other end of the chargeback chain. This process allows the merchant to challenge illegitimate chargebacks and recover revenue in the process. When choosing a chargeback management company, the merchant ought to keep in mind that a one-size-fits-all approach will simply not work.

3. What kind of results can I expect?

There are two key performance indicators (KPIs) to keep an eye on: the reduction of chargeback issuances and chargeback win rate. While most chargeback companies will boast impressive results, it’s important for merchants to sift through any misleading marketing claims.

One of the essential components of a quality solution is transparent, real-time reporting. At the end of the day, quality wins over quantity.

4. Will other chargeback management software integrate with my current platforms?

The best chargeback management service needs to be heavily integrated with other merchant service providers. The provider should be able to communicate easily with processers and gateways for fast onboarding, tight integration, and ongoing management efforts.

If a provider isn’t willing to create custom integrations for the CRM, process, or gateway currently being used, merchants will have to devote extra resources to compensate for additional hardware and training.

5. What will be included?

Based on individual need, merchants should consider the following product offerings:

• International processing: Look for a service provider with an international presence which works with any currency and can support a global eCommerce business.
• Reason codes: Some chargeback management companies have limits to their representment services based on certain reason codes. This means that some chargebacks won’t be challenged, resulting in the irretrievable loss of revenue.
• Comprehensive assistance: Just because a company offers additional perks or “freebies” doesn’t make them the best fit.
• Multiple service levels: The best provider ought to offer needed assistance in specific areas, but also allow for future growth.

6. What will it cost?

The cost of a chargeback management company can be gauged a few different ways, including:

• Regular monthly fees
• Paid-on-performance pricing
• Per-user fees
• Per individual action

Some companies will also upcharge for services like consultations, while others offer those for free. If price is based on transaction volume, future growth will also need to be considered.

Merchants should look for the best payment plan that fits their needs, with a model that is flexible enough to grow with them.

Last Update: July 5, 2021