The Commercial Benefits of Delegating Chargeback Processes

The e-commerce industry is continually evolving. With every new opportunity for vendors and merchants, new threats too emerge periodically. One major issue which is faced by e-commerce business across the world is that of chargebacks.

What Are Chargebacks?

Chargebacks are the cost that businesses have to pay for failed transactions. For instance, if a customer’s order fails to go through because of some error, the money that has already been deposited needs to be refunded to the user. The bank withdraws the previously deposited sum from the retailer or vendor’s bank account, sending it back to the user’s account. In principle, this concept is relatively easy to understand.

But, threats of retail fraud compel retailers and merchants to invest in chargeback protection schemes. There are numerous ways to protect chargeback transactions. The two most common solutions include – setting up an in-house chargeback management team and delegating the task to expert service providers.

Why Are Managing Chargebacks So Important?

• Vendors can choose to ignore consistent chargebacks. But, an excessive chargeback can harm a vendor’s reputation. Firstly, honest customers view the seller as inefficient. Secondly, frauds quickly sense which sellers are not managing their chargebacks efficiently. Thus, there are significant financial and security risks.

• It is estimated that 52% of the orders that were declared ‘fraudulent’ by merchants were good orders. That’s a lot of revenue loss because of inefficient chargeback management. Similarly, the threat of false declines has also been steadily increasing.

• So, vendors have to either set up an in-house chargeback management team or outsource this task to an expert service provider. Both methods are efficient but collaborating with an expert or agency has more advantages.

Benefits of Teaming Up With Chargeback Management Experts

Due to rapid commercial growth fueled by the internet, companies attempting to expand their reach are being obliged into partnerships with providers of ‘Managed Services.’ Trained managed services teams maintaining a range of functions for their clients. Their services improve operational efficiency and, more importantly, reduce expenses.

The leading providers of managed services are better than in-house departments because they are continually anticipating security risks and coming up with better ways to protect their client’s business. With the responsibility of managing chargeback processes put entirely on the shoulders of these experts, the management team can concentrate on other business tasks.

Their proactive chargeback management strategies offer these benefits –

Eliminates Revenue Loss

With each chargeback filing, a company loses money. Companies can always exercise their right to dispute the chargeback. But doing so involves administration fees, chargeback fees, etc. If the company loses the dispute, their losses multiply.
Providers of managed services use the latest eCommerce chargeback management software. Automating certain aspects of the dispute reviewing and resolving process saves time and increases the chances of winning.

• They guarantee maximum win rates by continually analyzing and improving their performances.
• They monitor updates regarding chargeback card brand policies. Their clients are always offered accurate documentation.
• This accuracy helps companies establish their own set of chargeback requirements.
Overall, there’s a guaranteed reduction in losses as both friendly and fraudulent chargeback attempts are met with equal efficiency.

Operational Costs

In-house chargeback management departments cannot and do not guarantee success. However, full-time providers of chargeback managed services have to meet specific goals to maintain their contractual obligations.

So, regardless of how much setting up an in-house chargeback management team costs, independent providers of chargeback managed services offer a more valuable deal. This guaranteed ROI can be used as means to reallocated company resources to other critical business tasks.

Doubling Down on Fraud Prevention

In 2020, there was a 13% increase in e-commerce fraud attempts. Companies in this domain shouldn’t just team up with chargeback management experts – they should also be setting up in-house fraud management teams.

The best-managed services providers are open to cooperating with in-house fraud management teams as it boosts their fraud prevention measures.

Software Updates

Managed service providers use the most flexible chargeback management software. The software can easily integrate with a company’s existing platform. Chargeback management experts can create custom integrations while maintaining total privacy. They don’t access sensitive company information, such as lead lists or customer transaction information.

Plus, they can easily update existing software with the latest fraud prevention tools. The ultimate aim of these experts is to eliminate the liability of fraud from their clients’ businesses. However, companies start communicating with gateways to facilitate the integration of these tools. They’ll also have to undertake integration fees. But, these one-time payments seem insignificant when compared to the long-term profits.

Collaboration with these tech-driven experts removes multiple burdens from the shoulders of business managers. After all, it’s not the business manager’s duty to update fraud prevention tools or anticipate security risks. That’s a task for chargeback management experts. These experts’ reports can be used to balance vital KPIs approval time, approval rate, etc.

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