opinion

New Year, New Tools for Tackling Chargebacks

New Year, New Tools for Tackling Chargebacks

Happy New Year! Looking back, 2023 saw some important developments for the industry. Visa lowered the limit on credit card surcharges to 3%, AI continued growing fast and Mastercard published an update to its Business Risk Assessment and Mitigation (BRAM) program, affirming that you can’t publish images using someone’s likeness without their consent. Looking ahead, let’s make 2024 a banner year as well, by implementing a stellar gameplan for ensuring compliance and avoiding chargebacks. 

Utilizing the Latest Tools to Prevent Chargebacks

In the year ahead, businesses will need to continue improving how they accept credit card payments and protect transactions.

In the year ahead, businesses will need to continue improving how they accept credit card payments and protect transactions. Fortunately, there are many steps you can take to help prevent chargebacks. Those include having good billing practices, using 3-D Secure, AVS and CVV, and enacting a liberal refund policy.

Even with the above, fraudsters will still try to defraud businesses at every opportunity — and frustratingly, issuing banks tend to side with cardholders, especially against adult businesses. Yet there are tools available to alleviate these burdensome concerns, like Rapid Dispute Resolution (RDR) and Cardholder Dispute Resolution Network (CDRN) by Visa, or Ethoca Alerts by Mastercard. These tools empower merchants with resources to intercept and prevent chargebacks, and have proved especially valuable in adult and dating verticals, where such measures have dramatically reduced chargeback ratios.

How CDRN and Ethoca Alerts Can Help

CDRN and Ethoca Alerts require human intervention, but they give a business 24-72 hours to take action. If you sell a tangible product, this may afford you the time needed to cancel or divert a shipment. If you sell memberships, it gives you the opportunity to reach out to your member and ask if everything is okay. As a business, it gives you the choice to issue a refund, address a consumer complaint or investigate further, as opposed to waking up to yet another chargeback.

Tapping Into RDR Effectively

RDR, on the other hand, works exactly like a chargeback, but it doesn’t count toward your chargeback ratio. It requires no human intervention and it automatically debits the amount of the transaction from your bank account, just like a chargeback. One key feature is that you, the business owner, can create rules on how RDR cases are handled. Maybe you want to refund every case under $50 automatically, or only refund specific chargeback reason codes. There are a variety of rules that can be created to tailor RDR to your specific needs. You can turn these services off and on as it suits you.

Leveraging ‘Order Insight’ to Mitigate Chargebacks

Those of you familiar with CDRN and RDR may be asking, “What about Order Insight?” Good catch. Order Insight has been enhanced with Compelling Evidence 3.0 (CE3.0), which is specific to Visa 10.4 disputes (“fraud card-absent environment”). CE3.0 provides transaction information directly to issuing banks to identify and block misuse of the chargeback system, thereby helping keep your chargeback ratios down.

I know this is a lot to unpack — especially since most of you are probably still working on returning all the phone calls and emails that came between Christmas and New Year’s, not to mention following through on that resolution to get back on your Peloton bike. But the good news is, if you leverage these modern tools, you can dodge potential issues and set yourself up for a successful 2024 and beyond.

Jonathan Corona has two decades of experience in the electronic payments processing industry. As chief operating officer of MobiusPay, Corona is primarily responsible for day-to-day operations as well as reviewing and advising merchants on a multitude of compliance standards mandated by the card associations, including, but not limited to, maintaining a working knowledge of BRAM guidelines and chargeback compliance rules defined in both Visa and Mastercard operating regulations.

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