Unfortunately, merchants aren’t going to win every chargeback dispute. That said, with the right tools and strategies, merchants can win enough to maintain a healthy overall chargeback win rate. The more won, the more revenue recovered.
So how about specifics? Generally speaking, most merchants should treat a 20% win ratio as a low bar. Aspiring for a 30% win ratio is in the cards for many companies and generally means you’re doing pretty well. Anything above 40%, meanwhile, is quite good.
Keep in mind that a “good” chargeback win rate can vary from industry to industry. In some industries and with some products, averages can dip below 20%. Meanwhile, in some cases, rates closer to 40% could be somewhat common for merchants who take fighting chargebacks seriously.
Failing to Fight Chargebacks is a Big Mistake
The first major issue with chargebacks is that many merchants simply fail to fight them. Time is always in short supply, and resources (like labor) are often scarce. Some merchants have come to believe that fighting chargebacks is a waste of time and so they don’t bother, leading to a 0% chargeback win rate.
Failing to fight chargebacks is a bad idea. Not only are merchants leaving revenue on the table, they’re also encouraging fraud. If fraudsters know they can quickly and easily find success via chargebacks, they’ll be more incentivized to engage in fraudulent activities.
Criminals look for easy targets, so if a particular company gains a reputation for not fighting chargebacks, it could become a favored target. On the other hand, if a merchant develops a reputation for fighting fraud and chargebacks, it may deter fraudsters.
Winning chargeback disputes can be a bit difficult, especially at first. However, as merchants learn to navigate chargeback representment, the process becomes easier. Using the right chargeback and dispute management tools can ease many burdens as well.
Fighting Chargebacks Is an Uphill Battle
Fighting chargebacks is a bit of an uphill battle, unfortunately. The way policies and laws are written favors cardholders rather than merchants. Indeed, merchants are often held responsible for chargebacks even if they did nothing wrong.
Let’s say someone leaves their wallet on a table at a café and their credit card gets stolen and the thief uses the stolen card to buy shoes from an online merchant. Unfortunately, the online merchant is probably going to be the one footing the bill. Once the cardholder realizes that their card is misused, they can file a chargeback, and they’ll likely get their money back.
In the above case, the merchant probably did nothing wrong. They received an order, were provided payment information, and since the thief had the physical credit card, they were likely given a Card Verification Value (CVV). In such situations, there’s not much a merchant can do. Yet because chargeback policies favor cardholders, merchants are often left at a disadvantage.
Still, you can win many chargeback disputes, and over time, your bottom line will likely benefit.
Prevention is Still the Best Course
The best way to handle chargebacks is to avoid them altogether. While merchants should work to increase their dispute win ratio, they should also use tools like chargeback alerts, Address Verification Services, IP monitoring, and more to crack down on suspicious behavior. Winning chargeback disputes certainly beats losing them, but avoiding them altogether should be a priority.
Increasing Your Chargeback Win Rate
Whatever your chargeback dispute win ratio is right now, there’s a good chance you can improve your metrics with the right tools and approaches. Even if you’ve set up robust chargeback management platforms, it’s crucial to keep an eye on developments. The best strategies and tools to fight chargebacks today may not be the best in a few years.
Likewise, it’s wise to study your transaction and chargeback data to see if you can uncover trends or trouble spots. You may notice certain products generating an abnormal number of chargebacks, and so might want to take extra care processing such orders. Or you could find a few clients who are simply abusing chargebacks. Ultimately, data is insight.
Need help with managing chargebacks and improving your dispute win ratio? Contact us today to learn how we can help your business.