When it comes to online transactions, financial institutions have several different plates to keep spinning. Not only do you play a part in helping keep cardholders safe from criminal schemes, you also have to defend merchants from consumers who might be engaged in illicit activity.
Chargebacks were first created as a consumer safety measure. However, the chargeback process has long been abused by cardholders. Consumers have found ways to cheat the system by filing illegitimate chargebacks, essentially getting something for nothing, a process known as friendly fraud. This can be the result of a simple misunderstanding, or it can be a case of deliberate abuse. In either instance, the end result is the same for the merchant.
One of the best ways that financial institutions can help merchants deal with this problem is through streamlined communication and collaboration.
Identify Opportunities to Collaborate
The eCommerce market has seen a huge spike in activity in recent years, but chargeback processes remain largely outdated. Disjointed and unaligned communication has also hampered merchants’ efforts to fight their growing chargeback problems.
Meanwhile, many banks have their own set of practices and rules, which breeds confusion about the correct way of handling chargebacks and leaves many disputes to slip through the cracks uncontested. It’s best that you ensure your clients understand what is expected of them. They should also be instructed on proper preparations to fight chargebacks if—and when—they occur.
Take the time to educate merchants on chargeback policies, as well as any updates or changes to rules. Card network rules change constantly, and merchants need to keep their practices up-to-date with these changes.
One step you can take is to carefully review each card network update regarding chargeback policy, identify any relevant changes, then prepare a simplified, plain-language document for merchants. The average merchant does not specialize in mastering payments industry regulations; they specialize in running their business. Providing this simplified guide would allow them to quickly implement any necessary procedural changes.
As a financial institution, you should also look for ways to implement digital tools into your organization that will allow customers to query merchants about certain transactions before a chargeback is filed. At this point, you should already be working with the card network inquiry programs (Order Insight and Consumer Clarity).
Order Insight and Consumer Clarity let cardholders and issuers query merchants about individual transactions. This can provide consumers with clarification about unrecognized purchases. This can provide the opportunity for both parties to communicate clearly and hopefully avoid a chargeback.
Streamline Communication Between Parties
Undoubtedly, FI’s have a fine line to walk. You must be prepared to offer consumers fast relief in the event they become a victim of eCommerce fraud. However, more effective communication can help clear up confusion surrounding correct chargeback practices, clarify chargeback sources, and minimize the risk of a dissatisfied customer filing a chargeback.
Unfortunately, there’s still no way to guarantee protection against chargebacks, even with these practices in place. That’s why there are tools available that can help further clarify the dispute process.
Dispute Lab simplifies the chargeback process for financial institutions. It removes the guesswork of rules and priorities, providing a comprehensive platform that does the hard work for you.
This innovative technology integrates easily into existing payment frameworks. The automated platform allows FIs to easily receive, interpret, distribute, and process every cycle of a dispute using queue-based routing and hundreds of customizable rules. Transaction retrievals, representments, and arbitration cases can be recalled and submitted in seconds. You can optimize disputes based on rules and priorities with a complete document and case workflow.
Dispute Lab allows you to prevent chargebacks, reduce costs, and deliver greater value to your merchant customers. Click below to request your demo today.