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Payments 101 - What is a Chargeback Alert?

Being on the receiving end of a chargeback dispute can be frustrating for merchants. They can be left feeling powerless to stop, reduce, or prevent them – simply because they are left out of the conversation until the very last stage.

Consumers are given a cut and dry 90-day window to dispute an unrecognised transaction on their card. Then, issuers can take up to six weeks to review the credit card chargeback dispute (note Visa restricts this process to 20 days) then the acquiring bank is notified. Only then, after every other party is made aware of the dispute...the merchant is made aware. 

The problem with this system is: by the time the merchant learns of the chargeback, it’s far too late to take meaningful action to resolve the dispute. Why? Because by this stage, it is already locked in the credit card chargeback process. Meaning, the issuer has accepted the dispute and sent on the request to the acquiring bank. 

However, all is not lost, because there is a solution that has been created with merchant-specific needs in mind – the Ethoca chargeback alert. 

This tool was developed to meet growing demand from merchants for a window of time where they can effectively respond and resolve disputed transactions before the situation becomes another blip in the chargeback system. 

What it is…

Now, you may be asking yourself, what is a chargeback alert? In simple terms, it is a notification system for merchants where, any time a customer calls their issuer to initiate a chargeback, the information is sent to the merchant. This creates a valuable window of time for merchants to respond before the issuer decides on the issue and initiates the credit card chargeback process.  

Overall, the chargeback alert notification system empowers merchants to make a decision on how to respond to a dispute,  giving merchants valuable time(which they have never had before) to initiate a refund or resolve the issue directly with the customer. If the dispute is resolved prior to the issuer making a decision, like through a refund for example, then the issuer cannot issue a chargeback – closing the dispute before it reaches the acquiring bank. 
This effectively cuts out the time-consuming and irreversible chargeback process which could take up to six weeks or longer. 

How preventing chargebacks works… 

Modern fraud prevention and chargeback alert systems, such as Ethoca Alerts, work in partnership with an extensive network of issuers, banks, and merchants to prevent fraud and chargebacks by sharing critical information.

When a cardholder calls their issuing bank to dispute a transaction, the issuer’s system then sends a notification directly to the merchant, in near real time. This notification empowers the merchant to take action whether it be a refund, a move to stop the order from being processed, or a decision to let the chargeback run its course. 

Many chargeback alert systems offer various points of access, Ethoca’s for example, offers two. The first is an online alert portal that merchants sign in to view and manage on an easy-to-read dashboard. 

Second is through an Application Programming Interface (API), which can be integrated into existing merchant systems. The primary benefit of this route is there are no additional sign-ins, and it can integrate with a merchant’s existing sales or order fulfillment systems.  

While the setup of an API can initially take more time, in the long run, merchants will be better off because they will have the flexibility to automate manual steps within the chargeback dispute process to streamline their workflow. Overall, this will save merchants time and money, allow them to recover goods or services, and can alleviate frustration and confusion with the dispute resolution process. 

Merchant chargeback protection

Overall, the chargeback process can be stressful for merchants, given the financial impacts of the process. Since it can hit them the hardest, it seems unfair they are the last to know! But, these merchant-specific solutions do exist, and they work to provide fast, responsive, reliable, and actionable solutions for fighting fraud and mitigating chargebacks. The benefits range from being alerted in near-real time when a transaction has been disputed, to helping merchants stay within the recommended fraud ratios. 

Chargeback alerts are the ideal solution, giving merchants peace of mind so they can relax and concentrate on what they do best – providing a great experience for their customers.  
If you are a merchant and would like to know more about how Ethoca Alerts can help your business get in touch with one of our team members today!

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