What third party solutions for chargebacks are available to prevent chargebacks?
A variety of third party solutions for chargebacks are available to retailers to reduce and eliminate chargebacks. These services vary in approach; however, one of the most effective approaches is a “closed-loop” process that sends disputes from the credit card issuer to the merchant so that the merchant has the opportunity to rectify the situation hopefully preventing the chargeback entirely. This approach allows retailers to make a decision on how they want to handle the situation – stop shipment of goods, discontinue services, issue a refund, negotiate a discount or accept the chargeback. Further, upon resolution, the Issuer is notified in real time that the dispute was properly managed. The retailer once again plays an active role in its own destiny rather than being reactive.
Although all chargebacks cannot be prevented, a large reduction (35-40%) can be accomplished. There are a number of significant benefits to a closed-loop process:
- Immediate retailer notification via direct integration with top issuers
- Communication delays eliminated because retailers have ample time to respond to consumer complaints (up to 72 hours is a best practice)
- Closed-loop processes give retailers confidence that alerts are real and actionable
- Customer-initiated situations that require attention are addressed immediately
- Quick resolution minimizes double refunding and second chargebacks
- Closed-loop communication links issuers directly with merchants – direct connection provides highest quality data and can prevent costly fulfillment of goods or services
- Merchants have complete control – provide a refund, extend a discount, halt shipping, discontinue services or accept the chargeback