Chargeback Monitoring Programs

A merchant has surpassed a chargeback threshold and is now on a monitoring program.  Now what?

The card brands have specific limits on chargeback counts and volume that merchants must abide by.  They typically receive a warning, and then are automatically enrolled in a program.

These programs come with fines attached. But the real risk is merchant account closure — which could limit transaction and sales volume to a point that impacts the business’s bottom line. 

If this happens, this is how you, as a merchant services professional, can direct them to the right resources.

➡️ The first step is to understand why the chargebacks are happening. Can we narrow it down geographically, a specific product line, issuer BIN, or payment plan (annual plan vs. monthly subscription?) The merchant will also need to track card-present and card-not-present disputes separately.  The key is to drill down as much as possible into the source and reason for the chargebacks, and then strategize as to how to reduce or eliminate them.
➡️ Put together a remediation plan, including a timeline for remediation.  The merchant will need to present this to the processor and the card brand’s monitoring program.
➡️ If the chargebacks are mostly friendly fraud chargebacks, please refer to that post for tools to fight that specific issue (see link below.)

Here are some specific tools that can be put in place to stop the bleeding:

Once subscribed, a merchant will receive instant notification when a cardholder disputes a charge with its issuing bank.  This gives the merchant an opportunity to intervene before the dispute is formally filed.  Merchants can subscribe directly to chargeback Prevention Alerts through Ethoca or Verifi. Alternatively, merchants can manage their disputes on a single platform, like Midigator, that incorporates these services.  Learn more about these services in this post.

This is a chargeback prevention tool created by Verifi and made available to technology resellers.  When an issuing bank is ready to process a chargeback, the RDR platform allows the acquirer to automatically issue a refund to your customer instead. 

This is the simplest solution, yet the most challenging to business owners.  The reason?  It often results in immediate slashes to top-line revenue.  But merchants must weigh the costs of chargebacks with a reduction in revenue.

Merchants should carefully assess and implement the solutions that best fit their needs.  No two merchants will be the same.  It is possible to exit the programs once enrolled, most commonly once the merchant is below the card brand’s threshold for 3 consecutive months.