How do you solve a 2024 problem with 2019 tools and resources? Sadly, that’s the reality facing merchants today when it comes to chargebacks.  

Global chargeback volume has soared in the last five years and is set to reach $165 billion in 2024, compared to about $72 billion pre-pandemic in 2019. While rates have risen, investment in chargeback management teams and platforms has been meager, and the domain has largely been skipped over in the broader digital transformation era that swept through ecommerce. 

Limited resources and fragmented, outdated technologies have forced many merchants to make painful, near-impossible decisions. The surge in chargebacks plus complexity of managing disputes means it’s now costing businesses far more than just the price of reversing sales.  

Chargeback management needs an overhaul to save merchants from this needless profit erosion, and the key element to changing the game is data.

Running with an injury — today’s chargeback management 

Rising chargeback rates caused the initial pain, but it’s been made considerably worse by chargeback management’s slow evolution.  This isn’t just an outlier situation: 60% of merchants are still managing chargebacks fully manually, according to findings in the research report, Chargeback challenges and what you can do about them

To add to this, systems have evolved sporadically and in a piecemeal manner, meaning most merchants are using several PSP gateways and have data spread across multiple systems. This fragmentation means accessing the information needed to successfully win a dispute has become extremely complex and time-intensive — not to mention the additional time needed to file and analyze that data to help with prevention, reporting, monitoring, and so on.

Under-resourced merchants have essentially been left with two options: 

  • Reduce time spent on disputes and (likely) hurt their win rate, or
  • Forfeit a portion of their chargebacks upfront to reserve resources needed to handle higher-value or more sensitive disputes. 

It is worrying but not surprising that according to recent research, 60% of merchants leave at least 40% of claims undisputed, while three in four recover less than half of all chargebacks.  

Chargeback rates show no signs of declining anytime soon, and merchants have to rise to the operational challenge or risk bleeding revenue from their bottom line. The need for transformation is obvious. The question is, where to start?

Putting the pieces together what chargeback management could look like 

Consolidating chargebacks into one integrated platform isn’t just convenient — it’s a game changer. And the number one reason is data. 

With all chargebacks under one roof, and all of their data centralized, your team can unleash the full force of analytics and make money-saving decisions that have a big impact on your bottom line. 

Data can power three key impacts when properly used in chargeback management:  

  1. Optimized management  

When you can access actual data points about transactions and customers plus order, fulfillment, and pre-chargeback alert data all in one place, you’re able to identify patterns, isolate problem areas, and strategize effective representment much more easily. 

The result? Increased capacity to compile evidence — something invaluable around peak holiday periods when chargebacks really hit.  

  1. Proactive prevention  

Armed with data, you can go beyond revenue recovery and implement strategies to prevent chargebacks in the first place. Not only does this save the hefty price tag that comes with a chargeback, it also safeguards your company’s chargeback ratio and helps keep it stay out of card network monitoring programs. With data and insights, you can start to dig into root causes of high chargeback rates. For example, you can find out if there is a link to something service-related or a particular business unit more impacted than others.  

The result? Targeted prevention strategies informed by data that mitigate challenges before they escalate into chargebacks and reduce overall rates.  

  1. Confidence and control  

Armed with data-driven insights and analysis, merchants can take a lot of the guesswork out of chargeback management and dispute with greater confidence. This also means you can better forecast and prepare for upcoming peak periods, giving greater control and power to your team.  

The result? More accurate forecasting, better team resourcing, and more time to work on strategic, higher stakes challenges.  

Charting the way to better chargeback management 

Merchants have largely accepted that chargeback rates are rising and now factor as a key part of running an ecommerce business. Today, however, you no longer have to continue to rely on siloed platforms that fragment the data and insights you need to fight chargebacks and keep costs under control.   

According to new research of more than 300 chargeback managers, half of merchants want the ability to manage their chargebacks all in one place, and a third want to be better involved in prevention. Proper access to data will empower merchants to make decisions based on facts and insights to retain revenues and control inefficiencies throughout the whole process — from prevention and dispute handling to boosting win rates.  Learn more about what new research reveals about the current state of chargeback management and how to make it better in Chargeback challenges and what you can do about them or talk to a chargebacks expert today.