Prevent Chargebacks Before They Happen

Protecting your MID (Merchant Identification) a vital portion of business online that we take very seriously. Maintaining a low chargeback ratio is key to maintaining a healthy merchant account. When chargebacks exceed card brand maximums, your merchant account is at risk of being shut down. If a merchant category has consistently excessive chargebacks, banks will sometimes shut down an entire vertical industry. For this reason, it is critical for high risk verticals to self-regulate and work collaboratively to establish industry best practices.

Chargeback Prevention

As an eCommerce merchant, you know that chargebacks are inevitable, odds are that every online retailer is going to experience a few chargebacks. Depending on the merchant account vertical, some more than others. Depending the vertical, chargebacks are normal. or even expected. Too many can ruin your credit card processing capabilities and even cost you your merchant account. This is why chargeback prevention for merchants is of the utmost importance. Preventing chargebacks and fraud is essential to maintain a healthy merchant account, and to avoid your account being frozen, or terminated. Using a single interface, we provide access to our global network of major card issuing banks and our #1 Voted Chargeback Prevention Program.

Chargeback Mitigation and Management

Reduce chargebacks and fight fraud through alerts, predictive analytics, and representments. Our integrated approach relieves you of the burden of managing chargebacks and fraud in-house or ad-hoc. With our intelligent velocity checking merchants can set rules and limits to flag or block unusual transactions. Our integrated network combines machine learning, linkage algorithms, and human intelligence to defeat fraud and increase sales. Through one portal merchants access a payment and risk management platform that delivers real-time analytics about the identity behind the transaction. From the gateway and beyond we cull transactional data from trusted sources to help you block fraud and know your customers.

PayMystic Fraud Prevention

How can I track my chargeback and refund ratios?

Keeping track of your Transaction Chargeback Ratio as well as your Volume Chargeback Ratio is critical because this is what Visa, Mastercard and payment processors monitor. Payment processors with high chargeback ratios in their merchant portfolios can trigger unannounced audits by Visa or Mastercard. For this reason, PayMystic, closely monitors chargeback and refund ratios, reacting quickly to spikes in activity. Excessive refunds, frequently the result of alerts, can be a sign of fraud or poor business practices. This type of information the card brands and banks may consider when assessing risk and potential closure of a merchant account and or vertical.

The formulas shown below use simple math to derive Transaction Chargeback, Volume Chargeback and Refund Ratios:

  1. Transaction Chargeback Ratio:

    Add total monthly number of chargebacks and divide by total monthly number of transaction. For example – if during a month you processed 5000 sales, and there were 100 chargebacks, your chargeback ratio would equal 100/5000, or 2.00%.

  2. Volume Chargeback Ratio:

    Add total monthly dollar amount of all chargebacks and divide by the total monthly sales volume.
    For example – if during a month, you processed $500,000 in sales, and your chargebacks were $10,000, your chargeback ratio would equal 10000/500000, or 2.00%.

  3. Transaction Refund Ratio:

    Add total monthly number of refunds and divide by total monthly number of transactions.
    For example – if during a month you processed 5,000 sales, and there were 100 refunds, your refund ratio would equal 100/5000, or 2.00%.

  4. Volume Refund Ratio:

    Add total monthly dollar amount of all refunds and divide by the total monthly sales volume.
    For example – if during a month, you processed $500,000 in sales, and your refunds were $10,000, your refund ratio would equal 10000/500000, or 2.00%.

How do I maintain low chargeback and refund ratios?

It is important not to ignore chargebacks, because win/loss ratios matter. Visa and Mastercard can impose penalties and fines in the tens of thousands on payment processors and their sponsoring banks for continuing to process transactions for merchants that exceed the permissible 2 percent chargeback ratio. Non-compliant processors and banks may also be subjected to further scrutiny and potential shut-down by card brands and regulators.

Here are some recommended ways to maintain low chargeback and refund volume ratios:

Create an easy refund process:

Refunds are a reality of life and a cost of doing business in the eCommerce industry. By accounting and budgeting for refunds, online merchants can accommodate dissatisfied customers, avoid chargebacks and improve transaction flows.

Stop fraud before it happens:

Proactively identify fraudulent and stolen cards and suspicious behavior when possible. Having items like an SSL certificate, additional billing details, and other fraud detection tools.

Be accessible to customers:

Dissatisfied customers who have access to live support will frequently be satisfied that they had the opportunity to air their grievances. They may be satisfied with a simple return or refund and find it unnecessary or initiate a dispute or chargeback.

Use automated emails:

Follow product orders and shipments with a simple survey or thank you email. This simple gesture will improve brand recognition when customers receive their credit card statements and make it easy for them to contact your company to complain or request a refund.

Implement a billing support hotline:

Providing customers with a dedicated, toll-free number and email address will alleviate their concerns and build good will. Online eCommerce businesses that are highly accessible to customers have been shown to increase customer loyalty and decrease chargeback and refund ratios.

Maintain excellent logistics and fulfillment:

In the always-on, always-connected world, customers expect immediate confirmations and emailed receipts when they place orders online. A good CRM program can automate this process and include tracking information with each shipment notification.

Maintain a high transaction count:

Companies with high levels of credit card transactions are in a better position to absorb chargebacks. Low-volume merchants can find themselves in the dubious position of having a high chargeback ratio with just a few chargebacks.

Initiate pre-chargeback and refund alerts:

Create instant notifications of incoming requests for refunds, chargebacks and assorted customer inquiries. These services can be implemented in-house or outsourced to third-party providers. Merchants have a small window to react to customer disputes before card brands rule in favor of consumers. Automated chargeback and refund alert systems help merchants mitigate risk.

“Having the protection and early alerts about Chargebacks has helped maintain my MIDs in a healthy standing, as well as lowered my overall Chargeback Ratio by 56%”

Partner with PayMystic

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