A recently announced partnership between an online retailer and a payment and risk management solutions firm highlights the growing need for chargeback prevention tools in the EMV chip era.
SoftwareProjects, a global online retailer, has adopted Verifi’s Cardholder Dispute Resolution Network to help it prevent chargebacks, increase transaction profitability and reduce fees on its international commerce platform.
The Verifi network connects close to 9,000 merchant accounts directly to top card issuers through a unique, closed-loop network.
When a consumer disputes a charge to the card issuer, the issuer is able to channel it directly to the merchant, a crucial step providing the merchant time to address the charge before a costly chargeback is involved.
And those charges are indeed costly. Chargebacks are already estimated to cost US merchants up to $40 billion each year and that number is expected to grow with the advent of EMV chip-enabled cards. Regardless of the initial reason, every $100 in chargebacks is estimated to result in $308 of costs to the merchant.
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SoftwareProjects General Manager Mike Peters explains the trouble caused by chargebacks.
“With previous vendors, up to 80 percent of our alerts resulted in false disputes in some way. Not only were we overpaying for alerts that never resulted in a chargeback, false alerts also created profit loss from over refunding and very expensive fire drills that required significant and expensive manual review.”
“With Verifi, we know that every dispute is real, with no errors or false alarms. By reducing false alerts and defects, we will dramatically reduce our total cost per chargeback.”
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