One big curveball that many merchants faced in the early months of the pandemic, and will continue to experience as the holiday season marches on, is chargebacks. In the early months of the pandemic, merchants saw staggering numbers of disputes.
At Chargehound, we saw dispute volumes spike as much as 2500% for some merchants. But the increase in chargebacks isn’t the only shift occurring in the aftermath of the pandemic. Merchants have seen increases in non-fraud dispute win rates as well.
From April through June, merchants using Chargehound saw a 32% increase in their win rate for non-fraud disputes, compared to the months preceding the pandemic. And from July through September, non-fraud win rates climbed even higher, increasing by nearly 51% compared to when the pandemic broke out in March. So, while the numbers of overall chargebacks have risen, merchants should remain optimistic as more of those disputes are winnable—with a comprehensive representment process.
Friendly fraud chargebacks, which can account for roughly 70% of total volume, have a high likelihood of recovery if merchants provide the right evidence within the allotted time frame. These disputes can amount to hundreds of thousands or even millions of dollars per year for merchants. The rising win rates for non-fraud disputes indicate an increase in friendly fraud volumes in these dispute categories, which means that the revenue recovery opportunity for merchants is actually much larger today than it was at the beginning of the year.
In most cases, merchants that fight chargebacks manually aren’t able to respond to all of their chargebacks without a massive time investment from their team. Often, the cost of manually addressing disputes can end up being larger than the winnable chargeback opportunity. Chargeback automation technology changes that equation entirely.
Now, merchants can scale their representment process to address 100% of disputes with no opportunity costs—capturing the entire revenue opportunity while reducing the operational complexity of their chargeback management. As a result, merchants that implement chargeback automation can start recovering two to three times more revenue while saving on costs.
The primary goal of creating a representment is to prove that the charge in question is legitimate. In order to do this, it’s best to lay out the facts clearly, stick to the relevant information, and create a human-readable document—after all, there’s often a real person on the other side of the process. Providing a clear and concise document will strengthen the chances of winning a case.
Formatting is also important: Including screenshots with the relevant information circled or highlighted can help the person processing the information easily pick out the important facts. Hyperlinks are unreliable, as the person reviewing the representment may not be able to open them if the document is reviewed offline.
Strong evidence is crucial, but packaging it up nicely can make a huge difference in success rates.
Fighting disputes programmatically creates an holistic picture of how chargebacks impact a business over time. This has myriad benefits: more accurate revenue forecasting, better fraud and chargeback prevention, and the ability to optimize the process for higher win rates. Tracking when and why chargebacks occur, as well as how successfully they are addressed, enables merchants to get a better sense of what’s working and what’s not. Chargeback data is invaluable in identifying trends and taking proactive steps to maximize revenue, especially in the rapidly shifting business landscapes we are experiencing today.
