What are Chargeback Alerts?

June 9, 2022/ Jarrod Wright /

Global chargeback volume grows by 18% each year, accounting for a nearly $20 billion loss annually. This is bad news from anyone’s perspective, even consumers.

Thankfully, merchants and banks aren’t defenseless. Investing in chargeback alerts can help you avoid many if not most incoming chargebacks that sap your revenue.

This article will explain what chargeback alerts are, how they work, then compare DIY methods with professional assistance.

What Are Chargeback Alerts?

Chargeback alerts are a dispute prevention product provided by a chargeback management specialist. Chargeback alerts allow merchants to proactively resolve disputes before they become chargebacks.

Although they sound similar, chargeback alerts and chargeback notifications are not the same thing. A chargeback notification letter is sent to a merchant when a chargeback has already been filed against them, as a means to let them know it exists and how to respond. When a merchant receives one of these, the only choice they have is to accept the chargeback or decide to fight back through a process called representment.

Chargeback alerts, on the other hand, are provided to merchants by a chargeback agency or card network in advance of the chargeback. They allow time to respond to disputes that can be resolved without the need to involve the bank.

Failing that, the merchant would then have the ability to decide to fight back if the occasion calls for it. The obvious benefit here is that the merchant would weed out many chargebacks without tacking on chargeback fees and penalties.

Ideally, merchants should look to chargeback alerts as a means to avoid chargebacks altogether, and save themselves time and money.

How Do Chargeback Alerts Work?

Chargeback alert services are only offered by professionals who are certified in the payments industry and maintain a good working relationship with banks and processors. Merchants may pay extra to individual networks to receive chargeback alerts, or hire a third-party agency with the expertise to manage many networks at once.

Either way, the chargeback alert process works as follows:

1. The Customer Disputes a Transaction: A customer contacts their bank, claiming a transaction was fraudulent, and asks to dispute it.
2. The Issuer Alerts the Provider: The bank notifies the chargeback service provider about the incoming chargeback.
3. The Provider Alerts the Merchant: The service provider notifies the merchant of the incoming chargeback, giving them time to decide if they will accept the chargeback, refund the customer, or fight back.
4. The Provider Notifies Issuing Bank: Once the merchant has made their decision, the provider then notifies the bank that the dispute has been resolved.

Can Merchants Self-Manage Chargeback Alerts?

Of course, merchants can self-manage this process. It often isn’t easy to do, though.
Chargeback self-management requires staff, time, and funds to respond to each alert and the bandwidth to manage these across multiple networks (who each have their own pricing scales, network, and rules). Indeed, if a merchant has the capacity for all of this, then they can be very successful at fighting back against friendly fraud and criminal fraud alike.

However, not every merchant runs a multi-million dollar company with hundreds of staff and heaps of disposable income. Also, even if you are a merchant with all of the above, chargeback management is a full-time job. Most merchants don’t have the time or bandwidth to handle it effectively.

Processors and card networks have been working on ways to address this problem for many years and provide merchants with more and better resources to combat incoming chargebacks. However, their coverage is limited to their own networks (you will pay for more than one service). Also, no coverage is absolute; friendly fraud chargebacks can still slip through merchants’ defenses.

Why Hire a Chargeback Service?

In order to successfully wrangle and respond to chargeback alerts in a timely manner without breaking the bank, hiring a professional chargeback service is likely the best option.

Chargeback specialists have the tools and experience to speedily respond to alerts on a merchant’s behalf. This can vastly limit the number of chargebacks merchants have to deal with each month. This saves precious time and money, which allows sellers to refocus on growing their business.

Chargeback services also offer more than quick alert responses. They tend to offer chargeback management by overseeing alerts for every network at once, guided representments, advanced analytics, and chargeback recovery.

Last Update: June 9, 2022