What You Should Know About Automated Chargeback Management (and How It Works)

Industry data puts the savings from automated chargeback management 45% less than manual processes, but that’s not the full story.

Before taking a deep dive into the merits of adopting automated chargeback management and how to go about it, let’s make a quick detour. Let’s examine why e-commerce merchants seemed so stressed out by the thought of post-holiday chargebacks during the New Year. And why you should plan to avoid that nightmare in the future.

As anyone that’s been in business for a while will tell you, the month of January is always notorious for challenging a merchant’s cash flow and balance sheet. As much as 51% of a retailer’s Returns are recorded in January. The UPS recorded a 26% year-over-year Return volume surge in January 2020. To be precise, consumers return about 15% of all merchandise they purchase online during the holidays, according to research. And you can add a 15% upside to that number in verticals such as fashion and digital goods.

But that’s on returns. How about pure chargebacks? Traditionally, about one-third of the $ 11 billion annual revenue loss to chargebacks also happens in the first few weeks of the year. The boom in online holiday sales spike usually turns into some rude chargeback shocks in the New Year.

Now back to our topic of the day: Why should you automate your chargeback management?

It’s simple:

Chargeback Automation saves time and resources and sets you up for business scale.

Using automated chargeback management for your e-commerce store saves you an ungodly amount of time and resources, especially in these uncertain times. Instead of playing the game of whack-a-mole by manually reviewing and responding to chargebacks, automated chargeback management procedures ensure that you refocus your resources on serving your clientele and capturing more market share.

By the way, there is a growing body of research and data to show that businesses that adopted automated chargeback management outperform their counterparts that manage chargebacks manually. One survey found that merchants using automated chargeback management technology reported an increase in ROI of 800 to 1,500 percent.

Amazing, right?

That’s just the start. Our data shows that vendors using Chargeflow.io’s 100% automated chargebacks and disputes management system often get an average of 75% win rate, recover at least $ 35,022 of chargeback revenue and save a minimum of 150 business hours each month. That incredible traction in automated chargeback and dispute mediation stems from reduced human error, faster turnaround time, and insightful data that helps vendors predict and mitigate future incidents.

It’s not rocket science—the more your sales volume increases, the greater the chances of more damaging chargebacks. Automated chargeback management tools such as Chargeflow.io optimizes your process to reduce the time spent collecting and submitting evidence. It pulls from over 50 data points and responds to any volume of cases in a split second without you lifting a finger. Thus, driving your cost of operations down and setting you up for a faster business scale.

Again, automation is not a nice-to-do kind of thing. 80% of businesses have automated a significant aspect of their operation. More so, 46% of U.S workers believe their company’s competitor already has a technological advantage.

That takes us to the next merit of automated chargeback mitigation.

What You Should Know About Automated Chargeback Management (and How It Works)

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Automated Chargeback management removes barriers to data and insights.

Regardless of vertical, the necessary and sufficient condition for business growth today is data and consumer insights. If you have enough data and exclusive insights into consumer behavior, you’ll win. It doesn’t matter what you sell or how small your business is; these two elements will guarantee your success…or the lack thereof. Period.

Not having accurate data and customer insights is like flying blind.

Think about it, do you suppose that Amazon is the best e-commerce company ever created? And would you say that Jeff Bezos, now worth $ 182.7 Billion according to Forbes, is the smartest person to have adopted the e-commerce business model?

Your guess is as good as mine. The separation is that the e-commerce behemoth has access to more relevant data and customer insights than the others. We all know this. Success is not an accident, and getting what you want is not that hard. But you have to put the pieces together to provide you the results you need. You have to structure your work, your operation with great precision. Irrespective of how much money you make, if you don’t know how to mitigate disputes effectively, you’ll still have issues at the end of the month. In that wise, how you manage your chargebacks is more important than how much sales you make.

Another crucial merit of using automated chargeback mitigation is getting valuable data on the chargebacks’ root causes. Many businesses major in mediating the crisis, which is nice. But how about excavating the reason codes for those chargebacks in the first place and using the learning curves to build your defense arsenal? How about leveraging the data you get from an automated chargeback mitigation program, such as would be available in ChargeScore® by Chargeflow, to gain uncommon business insights?

After analyzing millions of disputes and using the proprietary Machine Learning and Artificial Intelligence algorithm, ChargeScore® predicts with high accuracy the likelihood of recovering every one of your disputes. That data also puts you on top of your customer’s buying patterns, with AI-based tips to lower your dispute rate and take your chargeback win-rate to a whole new level. That service is 100% free.

Automated Chargeback management is about ensuring positive revenue.

Let’s face it. You’re not in business to play around, are you?

To serve the world and help customers meet their needs is an admirable aspiration. But at the end of the day, business sustainability is the key to ensuring you continue to keep the lights on. Smart entrepreneurs like Warren Buffet will tell you, cash flow is everything. But it’s not just about having adequate cash flow; the end goal is always to maintain a positive revenue. That’s how you stay in business. That’s how you keep executing on those wonderful aspirations.

But you already know that otherwise, you wouldn’t be reading this article. You are reading this work because you are tired of flushing your hard-earned revenue down the dispute mediation drain.

Today, chargebacks represent a growing threat to EVERY e-commerce vendor’s balance sheet. I’m talking about a $ 130 billion problem. And 40% of consumers who successfully file a chargeback will file another within 90 days. One study of the digital commerce landscape found that “42% of businesses describing themselves as very digitally mature also stated they were holding back from digital innovation because of e-commerce payment fraud.” Another similar study found that businesses that outsource their payment-related risk management processes get better results than those who mitigate those issues in-house.

In summary, the merits of automated chargeback management are enormous. Apart from recovering more valuable revenue, reducing the cost of operation by minimizing mundane tasks, making sense of data to mitigate future chargeback incidents, you also get to elevate your business processes.

Here’s the thing, though: not all automated chargeback solutions are built the same. In an industry heavy with salespeople claiming to offer you sunshine and rainbows, there are companies out there who deliver the bag by partnering with merchants to solve their pressing problems.

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Author: Tom-Chris Emewulu

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