There are many perks of chargeback recovery but also some cons. It’s costly and requires constant vigilance. Still, if you are willing to fight friendly fraud and win, chargeback recovery can be a great source of net income and protect your bank account.
Chargeback Recovery Isn’t Fun.
Chargebacks are a serious problem for retailers. They cost them a fortune in time and money and are usually caused by fraud. In 2017, retailers lost $31 billion to chargebacks and were expecting to lose an additional $25 billion to ‘friendly fraud.’ But there are ways to fight against chargebacks and recover your lost money.
The first step to chargeback recovery is identifying the chargeback’s source. A chargeback is an attempt by the card-issuing bank to recover money a merchant has lost. The merchant must resolve the chargeback whether the chargeback is fraudulent or friendly. If the merchant proves that the original transaction was legitimate, they can recover the money from that sale.
The costs of chargeback recovery are high. According to CNP fraud solutions, chargebacks cost businesses billions yearly. Each chargeback costs a merchant an average of $2.40, which means that a single chargeback can cost a business nearly $1,200! Not only does a chargeback affect your business’s immediate revenue from a lost sale, but it also costs you the nonrefundable chargeback fee charged by your acquiring bank. Thankfully, there are ways to reduce chargeback costs and recover lost revenue.
It’s A Way To Fight Friendly Fraud.
Chargeback recovery is an important part of protecting your business from friendly fraud. It is a way of reversing a chargeback that is based on false or inaccurate information. This type of fraud can devastate your business, but you can fight back by educating yourself on how to fight back and reducing the number of fraudulent disputes you receive. The first step in chargeback recovery is blocking a fraudulent customer. Many successful fraudsters are habitual offenders, so blocking them from future purchases is important.
Another way to fight friendly fraud is by ensuring your company is easily identifiable on bank statements. Often, a consumer will dispute a charge if they don’t recognize the brand or website. To help prevent this, make sure your brand name matches your legal billing name.
It’s A Way To Recover Losses
Chargeback recovery is fighting chargeback disputes and reclaiming disputed funds from customers. It is an important part of credit card fraud prevention. Successful chargeback recovery increases net income, protects the bank balance, and reduces the risk of cash flow issues. It also positively affects issuers, who are more likely to give you the benefit of the doubt. Finally, winning chargeback disputes helps build a good reputation and reduces the number of disputes that reach the chargeback stage.
Chargeback recovery services represent businesses that have suffered from fraudulent or wrongfully charged-back accounts. They can help businesses recover funds by filing a representment claim with the bank. A successful chargeback recovery strategy can increase a business’s net profit margin by as much as ten percent.