Best Chargeback Protection Companies
Chargeback fees can cut into your business’s bottom line by lowering your revenues and charging you fees. They can affect any business, but they’re particularly troublesome for small businesses, which don’t usually have much money to spare, and e-commerce stores, which can’t process payments in person.
If your chargeback ratio gets high enough, you may need a high-risk merchant account, which often cuts into your earnings more by charging you higher prices for payment processing and other essential services. Bankcard has more affordable fees for high-risk merchant accounts, but it’s still best for your business to avoid chargebacks.
Chargeback prevention companies can help you avoid these fees so your business can keep more of its generated revenue. But before hiring someone, you should learn about the best chargeback protection companies and their services.
Although Bankcark isn’t a chargeback management company, its high-risk payment gateway can help you avoid fraud and other factors that can lead to a high chargeback ratio.
What chargeback management services do companies provide?
The best chargeback protection companies provide a wide range of services to prevent or reduce chargebacks. When comparing chargeback prevention companies, look for options that offer options such as:
- Chargeback representation for your business, so you don’t need to take time out of your schedule to handle every inconvenience.
- Fraud protection that pivots blame from your company to another financial institution or agency that should have stopped payments earlier in the process.
- Machine learning that collects data points to identify fraudulent chargebacks.
- Chargeback alerts that let you know when to issue a refund instead of paying a chargeback penalty – it’s often the lesser of two evils.
- Dispute resolution that can lead to lower fees or even eliminate the chargeback.
- Chargeback management that reviews your data to identify root causes and vulnerabilities so you can make mitigation efforts.
Before choosing a chargeback management company to represent you, ask providers whether they offer these and other services.
Top companies for chargeback management services
Some of the most popular companies for chargeback management services include:
- Verifi—noted as a good option for merchants that prefer Visa credit cards.
- Chargebacks911—has a history of working with high-risk merchants.
- Midigator—uses analytics to identify potential chargebacks and automates responses for you.
- ClearSale—known to help reduce false declines.
- Signifyd—a strong option for e-commerce sellers.
- Kount—comprehensive chargeback protection services.
- Sift (previously called Chargeback App)—a great option for stopping friendly fraud.
- Chargeback Gurus—a service that analyzes chargeback metrics to find steps toward remediation.
- Ethoca—a platform dedicated to improving digital experiences to prevent friendly fraud and chargebacks.
Some payment processors have built-in chargeback management services that could help you avoid fees and lost revenue. These include:
Keep in mind that these companies frequently avoid working with industries they consider “high-risk.” Some businesses even report that Stripe and other popular payment solutions have canceled their accounts after learning that they work in industries such as online pharmacies, payday lending, and credit repair.
Bankcard works with these and many other high-risk industries, allowing you to process payments without paying outrageous fees.
Do you really need a chargeback protection company?
While the best chargeback protection companies provide services that can protect you from fees and lost revenue, you might wonder whether you actually need them. After all, several mainstream payment processors like PayPal and Square have built-in chargeback protection.
The truth is that some companies need chargeback prevention companies more than others. If you have an e-commerce store, subscription-based business model, or work in a high-risk industry, it’s in your best interests to examine the best chargeback protection companies and work with one that will suit your business needs.
It certainly doesn’t hurt to have a chargeback management company on your side. You might not need to use them all the time, however. For instance, you might temporarily contract with a chargeback management company to identify the most common sources of your chargebacks and receive information about how to reduce them.
You may find that starting a high-risk merchant account with Bankcard brings you closer to your goal. Bankcard is exceptionally effective at improving payment security when you don’t have physical access to a customer’s credit card.
While you might not need chargeback prevention companies all the time, they play a useful role in building business success if your business has many chargebacks eating into your bottom line.
Common questions about chargeback protection and prevention
Chargebacks are always a pest for online sellers and businesses with high-risk merchant accounts; you may find yourself with a lot of unanswered questions. Below, you can read about the most commonly asked questions.
Why do chargebacks exist?
Chargebacks exist to protect consumers from unauthorized transactions. For example, a person may ask their credit card provider to issue a chargeback after reviewing their statement and finding a purchase they didn’t make. If the credit card company agrees that the charge was fraudulent or inaccurate, it will use a chargeback to return money to the consumer. Chargebacks can also happen when customers receive products or services that don’t match their expectations.
While chargebacks protect consumers, they can harm your business by unexpectedly lowering revenues and adding fees. A chargeback management company can’t eliminate all chargebacks, as mistakes and successful fraud attempts will slip through the cracks periodically. However, the best chargeback protection companies can find ways to reduce the number of chargebacks companies get. They often reach this goal by showing clients how to improve payment security and customer services.
Where do chargebacks come from?
Chargebacks typically come from customers or credit card providers. A reliable chargeback management company can help you identify the origins of your chargebacks.
What is friendly fraud?
Some consumers request chargebacks because they don’t think their households made purchases. For example, a parent might dispute an online purchase without knowing their child used the family credit card. Customers can also forget that they paid for goods and services.
Chargeback prevention companies use several strategies to prevent friendly fraud. Your chargeback management company might recommend adding information to credit card charges. This way, you can remind customers what they bought from you.
You may also reduce your chargebacks by improving communications with customers. For instance, a company that charges a monthly service fee might send a reminder one week before initiating the charge. The message will prepare customers for the upcoming charge and provide them the opportunity to cancel their subscription if they desire to.
How can you protect against chargebacks?
All businesses will get a few chargebacks. It comes with the territory of taking credit card and debit card payments. However, you can take steps to prevent chargebacks and decrease the number you deal with.
Some of the most important steps for chargeback prevention include:
- Requiring card security codes (CVV numbers) when accepting online payments.
- Asking cardholders to enter information that helps you confirm their identities, such as the name on the card and the expiration date.
- Using 3D Secure Protocol (3DS) to add another layer of fraud prevention to your payment process.
- Utilizing Bankcard’s Enriched Alerts, a feature that sends you a notice when a customer plans to file for a chargeback.
- Providing good customer service to keep consumers happy and informed. For example, you might send email updates to subscription holders before charging their cards.
- Reaching out to unhappy customers to resolve complaints before they request chargebacks.
- Addressing negative reviews you find online.
- Reconsidering your customer service hours and options so more people can resolve their issues before pursuing chargebacks.
- Sending real-time notifications and alerts that inform customers when your warehouse has an item on backorder or a shipment gets delayed for other reasons.
As someone processing credit and debit cards, you want to create a streamlined process that gives customers more control and easier access to your business. If you can keep your clients happy and address issues quickly, you should find that you experience fewer chargebacks.
How can I learn more about why chargebacks happen?
During the chargeback process, customers or credit card issuers will identify why chargebacks happen. Most companies use chargeback reason codes. Knowing what these codes mean, you can learn more about the reasons behind each chargeback. Eventually, you might see trends that help you find ways to fight chargebacks by avoiding situations that frustrate customers.
Credit card companies can use unique reason codes, but most of them are similar to the following codes from Visa:
- Reason Code 30: Merchandise not received or services not performed
- Reason Code 53: Merchandise wasn’t as described or arrived damaged
- Reason Code 62: Counterfeit transaction
The next time you see a reason code, look it up online so you can understand precisely what it means. Chargeback management services can also help you understand what the codes mean. By visiting credit card websites, you may also discover what chargeback reason codes mean.
There are different types of chargebacks, so you need to know why they occur. Otherwise, you can’t make a plan to prevent problems that lead to costly chargebacks that damage your reputation and financial health.
Can customers request partial chargebacks?
Chargebacks don’t always mean you must return the full purchase amount to the customer. Options include:
- The full transaction amount
- A portion of the transaction
- Several partial-amount chargebacks
Do people have to request chargebacks within a certain amount of time?
Yes, but it’s a rather generous amount of time. Federal law says that all consumers in the U.S. have a minimum of 60 days to dispute charges. Most major credit card companies, including Mastercard and Visa, give their users at least 120 days.
Unfortunately, a customer might not issue a chargeback until months after completing a transaction. Keep careful records to determine how this affects your business’s financial health.
What are common reasons customers request chargebacks?
About 30% of chargebacks happen because a purchase was made with a stolen credit card. A payment gateway from Bankcard can help lower the risk that you process payments from stolen cards.
Other reasons for chargebacks include:
- Products never reaching buyers
- Retailers shipping the wrong items
- Products don’t meet their descriptions
- Products failing to meet buyer expectations
- Orders getting billed twice (usually from honest mistakes and clerical errors)
If you have many chargebacks and don’t know why, working with chargeback prevention companies could give you more insight into ways to improve services and security.
How much do chargebacks cost?
Chargeback fees usually fall between $20 and $100, although you may lose much more money than that. For instance, you will still lose the credit card processing fee you paid to complete the sale. Depending on your credit card processor, that could mean paying at least 3% of the purchase amount. Bankcard charges a flat rate for credit card processing, so you avoid some loss by choosing the service.
You also lose revenue that you thought your business had earned. It becomes a confusing complication that makes it difficult for you to track payments. You think your business is doing very well. Then, you discover that you didn’t earn nearly as much money as you thought. It can seriously undermine efforts to grow small businesses.
Did you pay for the customer’s shipping and handling? You will probably lose that money, too. Depending on the size and weight of the product, that could be anywhere from pocket change to hundreds of dollars.
Lower your chargeback risks with Bankcard
There isn’t a foolproof way to prevent all chargebacks. However, you can take steps that lead to lower chargeback ratios.
Bankcard’s credit card processing and payment gateway API can take you closer to your goal. Reach out to Bankcard today to learn more about how a high-risk merchant account can help.