Shanta Paratian, Senior Consultant based in London, caught up with Monica Eaton-Cardone, Co-Founder and COO of Chargebacks911, a provider of chargeback management solutions. Chargebacks911 was founded in 2011 and has over 350 employees worldwide.
What is a chargeback? When customers file a chargeback with their card issuer, this means that they are disputing a charge and request the card issuer for a refund. A chargeback is a transaction that a card issuer returns to an acquirer as a financial liability and which, in turn, an acquirer may return to the merchant. There are three common reasons for chargeback including fraud, processing errors, other disputes (e.g. customer disputes). The card schemes define the chargeback process, rules and regulations.
1. How did you launch Chargeback911? Tell us your story.
I actually created Chargebacks911 by chance. Nearly a decade ago now, I was an online merchant and found that consumers were ruthlessly making false claims to get their money back. When a consumer disputes a card transaction with their bank, the merchant often struggles to prove their innocence and gets hit with severe fees and penalties. After I had my merchant account suspended because too many consumers were trying to cheat the system, I decided to decipher the convoluted dispute process and start defending my business properly. At the time, there was no one out there to help me understand it, so I got to work to figure out how to dispute unfair allegations and protect my rights as a merchant. Otherwise false claims would have destroyed my business. Once word got around about what I was doing, others began asking for help – and Chargebacks911 was formed. We started out solely focused on merchants, but over the years, learned that when it comes to chargebacks and disputes, this is a problem that affects all parties. As a result, we also provide solutions for institutions and schemes.
2. Payment providers such as PSPs often offer a large range of services including chargeback management to merchants – how do you differentiate yourself with your ‘niche’ offering?
Other vendors rely on specific gateways, CRM, or a software package to source their data and service their clients. We address the three key sources of payment issues: merchant error, criminal fraud and friendly fraud. We combine our Intelligent Source Detection™ technology with human forensics to gather data from any resource. In doing so, we can identify the internal errors that cause genuine payment disputes, as well as the external issues that result in fraudulent claims. We compile detailed dispute documents for guidance on flagged transactions and notify the merchant or institution of any threat we intercept. We also proactively advocate an industry-wide chargeback and fraud policy reform by working with card schemes, merchants and banks.
3. Are chargeback issues similar across industries and geographies or are there noticeable differences?
Chargebacks are not restricted to certain regions or retailers, but some industries are more likely to feel the wrath than others.
We found that those selling digital goods or services have the biggest battle, with 30 percent of merchants reporting chargeback rates above one percent (the industry-standard maximum), compared with 21 percent selling physical goods online. Retailers selling apparel and jewellery, and companies in the travel and leisure sectors, meanwhile, report chargeback rates below 0.5 percent.
We also know that success in disputing claims also varies from sector to sector. More than a quarter of retailers in the health and beauty industry have a win rate greater than 60 percent, compared with just 12 percent of streaming companies. Shockingly, as many as one in four food and beverage companies say they have a win rate of as little as one percent! Statistically, less than half of retailers engage in disputing their chargebacks and those who do recover less than 15% of their funds (based on surveys conducted with merchants using in-house teams over the last year). Understanding how the system works, having the right technology and expertise is the best way to improve these statistics.
4. What do you do in your spare time? What are your hobbies?
In my spare time, I like to get creative or spend time outdoors. Spending time doing arts and crafts or playing sports with my two children is always at the top of the list.