What if there were a panacea for chargeback prevention? A single solution that eliminates risk completely? Unfortunately, complete protection requires multiple layers of protection, specific chargeback tools are used for different stages of the transaction process. While each chargeback prevention method differs, it is best to combine these methods.
- Fraud Deflection: This tool sits in the pre-authorization stage of the transaction lifecycle. With the right one, fraudulent transactions are prevented from being processed before they result in chargebacks. The capabilities of this tool vary and depend on the vendor you choose to work with Click Here. Some fraud deflection services verify the identity of the shopper. Others specialize in detecting suspicious order details.
- Address Verification Service (AVS): Your processor or gateway offers this tool. Click here or here. It happens in the pre-authorization stage of the transaction lifecycle too. As part of the checkout process, AVS checks the billing address provided with the card issuer’s records. As the real cardholder would likely provide accurate information, a mismatch could indicate an unauthorized purchase. As a result of AVS, you can decline transactions that seem high-risk. So, you’ll be able to stop more bad transactions from happening – transactions that would eventually lead to chargebacks. Another reason why AVS is important is that the results of the analysis are used, in part, to determine Visa’s liability in allocation disputes, and the chances of receiving more disputes are increased if you do not use AVS. On the other hand, if the cardholder is claiming fraud and you have complete AVS matching, you can strengthen your defense.
- Card Security Code Verification: Your processor or gateway Click here or here offers this tool and it also happens in the pre-authorization stage of the transaction lifecycle. You might already know that every card has a security code (sometimes referred to as CVV2, CVC2, CID, etc.). A code mismatch could indicate the shopper doesn’t have the card in hand. For instance, stolen account information is being used by fraudsters. This tool is important because it performs a similar function as AVS when it comes to preventing chargebacks. Chargebacks can be prevented with the use of data collected from transactions. And, CVV2 results will be used to determine the liability for Visa allocation disputes
- Blacklist: Your in-house team can maintain a blacklist or Parselytics offers a collective blacklist. This happens during the post-authorization stage. A blacklist is a unique database of customers who have previously done a chargeback or filed a dispute. This technology can detect orders placed by customers who are in this database. You can choose to either automate cancellations based on customized criteria or you can manually review the orders. This tool is important because you can view and choose to cancel purchases made by people with a chargeback history. This contributes to a low chargeback rate and a healthy merchant account. With a blacklist, you can prevent losing merchandise and shipping fees. If you don’t catch high-risk transactions with a blacklist, you’ll triple your costs — you’ll lose merchandise, you’ll pay for order fulfillment, and you’ll receive a chargeback fee
- Order Validation: Mastercard’s Consumer Clarity and Visa’s Order Insight are offered through certified resellers, such as Parselytics. While some chargeback prevention tools are able to resolve the dispute and keep your chargeback-to-transaction ratio healthy; yet, revenue is still lost. This tool is unique because it can potentially resolve the dispute and prevent revenue loss. You can respond to inquiry requests and share detailed transaction information with the issuer. If this successfully clarifies the transaction with the cardholder, you can prevent the chargeback and keep the revenue.
- Prevention Alerts: Parselytics offers this tool, which is activated during the Post-sale stage. Once the cardholder has started to dispute a transaction, you will get an alert. If you are able to refund the transaction and notify the alert vendor within 24 hours, the dispute will be settled without allowing a notorious chargeback fee to post on your account. Prevention alerts are the last opportunity to resolve a dispute before it becomes a chargeback. If a fishy transaction has slipped through all your protective shields, then this is the last chance for chargeback prevention.
- Analytics: Who offers this tool? Parselytics
The analysis takes place post-chargeback and it illuminates patterns, and any anomalies to the patterns may indicate hidden issues. Identifying those issues is a stepping stone in the right direction that helps shed light on why chargebacks are happening so you can solve issues at their source. Analytics play a very important role in chargeback prevention.
Without analytics, your chargeback prevention strategy is:
- Based on hunches and guesses
- Capable of producing only short-term results
- Reactive
- Highly vulnerable to false positives and unnecessary revenue loss
With analytics, your strategy is:
- Based on intelligent, data-driven decisions
- Capable of generating sustainable success
- Preventative
- Optimized for maximum ROI
How many of these chargeback prevention tools do you use? Do feel like you can benefit from more.
If you’d like a one-stop shop for chargeback prevention, Parselytics can help. Managing all tools from a single portal increases transparency and efficiency. Adding Parselytic’s automation can also make your chargeback prevention more successful and cost-effective.
Sign up for a demo today to see these chargeback prevention tools in action.
