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A guide to chargeback management

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedOct 20212 min read

For any business, dealing with unhappy customers is an inconvenient reality. When a transaction goes wrong or a buyer isn’t satisfied with a product or service, your team will want to deal with the aftermath quickly and effectively. Managing chargebacks is just one part of this.

This guide will help you get your chargeback dispute management right and learn how chargeback management tools work.

What are chargebacks?

Similarly to refunds, chargebacks occur when customers who have paid by card or direct debit are unhappy with the products or services merchants have provided. However, rather than contacting merchants directly to get their money back, buyers put in chargeback requests with their card-issuing bank.

Chargebacks are designed to prevent fraudulent transactions, cover customers who haven’t received products and services they’ve paid for, avoid incorrect or multiple payments and ensure that buyers have enough funds to cover their purchase.

However, managing these chargebacks can cost merchants time and money if done inefficiently. Not only do banks charge merchants for dealing with the process but, in the case of ‘friendly fraud’, customers can keep products or receive services without having to pay.

What is chargeback management?

Chargeback management is the process that businesses use in order to deal with chargeback requests from customer banks. By dealing with chargebacks proactively you can avoid losing revenue unnecessarily and ensure that any requests are dealt with quickly and effectively.

Having a chargeback management process in place can help you to:

Deal with customer disputes proactively: this will help you to maintain your retention rate and offer the best customer service even in the worst scenarios.
Process transaction errors: whether the customer has been charged twice or the incorrect amount, getting this solved quickly is key to keeping customers happy.
Avoid fraud: whether someone has stolen a customer’s details or a buyer has received a product and is now trying to claim their money back illegally, having a process in place can help keep your revenue (and time) protected.

Getting your chargeback dispute management right

There are lots of benefits to getting your chargeback dispute management right, including:

Protecting revenue from fraud.
Retaining (even unhappy) customers.
Saving time and money which would be spent dealing with disputes.
Protecting your reputation with customers and banks.

To take advantage of all of these benefits, it’s important to have a solid chargeback dispute management strategy in place so your internal teams know exactly what to do in any scenario.

Your strategy should give your team guidelines on when chargebacks should be disputed, how they should be managed and who within the team should be involved. It should give advice on how to spot potentially fraudulent claims and ensure that legitimate requests are dealt with as quickly and effectively as possible.

In some cases, chargeback management software might be a good option to help your team manage requests.

How do chargeback management tools work?

There is plenty of chargeback management software out there, so it’s important that you understand exactly what each tool does so you can choose the right one for your business. Many online payment providers like GoCardless will help you to track any chargeback requests that come in. However, GoCardless offers you extra support to take you through the process step by step.

As well as helping you to identify whether the claim is fraudulent or not, our system can provide the evidence you need to dispute a claim and even track the status of the claim itself to make sure it’s dealt with as quickly as possible. Plus, with our expert team on hand, we can give you the support you need to deal with these requests and make sure you don’t get caught out by incorrect or fraudulent requests.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.