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Payment industry experts often talk about using chargeback prevention alerts to reduce risk.
But what are prevention alerts? Could they help your business?
Here’s what you need to know to get the best results from this chargeback prevention tool and how to optimize your ROI.
- What are prevention alerts?
- Why should you use prevention alerts?
- Who offers prevention alerts?
- What are the differences between the two prevention alert networks?
- Which prevention alert network should I use?
- What is the workflow for prevention alerts?
- How can I optimize prevention alert management for maximum ROI?
What are prevention alerts?
Prevention alerts are primarily used to resolve consumer disputes so an issue won’t escalate to a chargeback.
Prevention alert networks enable each participating issuing bank to communicate directly with merchants in real time. The issuer alerts the merchant when a cardholder has disputed a transaction so the merchant has a chance to provide a refund.
Why should you use prevention alerts?
There are several useful benefits of chargeback prevention alerts:
- Reduce chargeback rates by about 20-30% to help prevent chargebacks and chargeback threshold breaches.
- Stop order fulfillment so the cost of goods isn’t lost.
- Identify issues within 24 hours of a cardholder dispute, rather than waiting until a chargeback is issued 2-5 weeks later.
- Improve the customer experience by resolving issues quickly.
Any merchant — whether card-present or card-not-present, big or small — can benefit from chargeback prevention alerts.
Who offers prevention alerts?
There are two vendors who maintain prevention alert networks:Wintranx.
NOTE: Rapid Dispute Resolution provides a similar functionality to prevention alerts. To learn more about this alternate form of post-transaction chargeback prevention, visit our RDR page.
What are the differences between the two prevention alert networks?
The basic functionality of both alert providers is the same. They both help merchants resolve disputes and avoid chargebacks. However, the way they go about providing that functionality is slightly different.
VERIFI
- Originally created to help merchants resolve issues resulting from non-fraud, consumer disputes
- Started collaboration with global banks recently
ETHOCA
- Originally created to help merchants resolve issues resulting from legitimate credit card fraud
- Started collaboration with global banks early
Because each prevention alert vendor has a slightly different area of expertise, they partner with different banks. A few issuing banks are in both networks, but for the most part, each provider has a unique network of issuers.
Which prevention alert network should I use?
There are benefits associated with both chargeback prevention alert networks. The one you choose will depend on characteristics specific to your business.
Use VERIFI if…
- the majority of your chargeback reason codes are for consumer disputes (merchandise not received, credit not issued, etc.).
- you sell to a predominately US customer base and seek coverage in the United States
Use ETHOCA if…
- the majority of your chargeback reason codes are for unauthorized transactions.
- you sell to customers within the US, but also globally.
Use BOTH if…
- you receive a mixture of both fraud and non-fraud chargebacks or many regular transactions are high risk.
- you want the most comprehensive protection possible.
What is the workflow for prevention alerts?
In general, the prevention alert workflow is pretty straightforward.
- The issuer notifies the alert provider of the dispute.
- The alert provider transmits an alert to the merchant.
- The merchant refunds the original transaction and notifies the alert provider that action was taken.
- The alert provider notifies the issuer that the dispute has been resolved.
How can I optimize prevention alert management for maximum ROI?
If managed correctly, chargeback prevention alerts can yield significant ROI. Best practices and management tips depend on how you choose to integrate with the alert networks.
You can either integrate directly with Verifi and Ethoca, then manage all responsibilities in-house. Or, you can integrate through a certified reseller partner and outsource some or all responsibilities.
Options are listed below, ordered from highest ROI to lowest.
