Preparing Your Chargeback Strategy for the Holiday Season

Chargebacks have been increasing since 2020, and it does not look like they will be slowing down anytime soon — a recent Mastercard report shared that chargebacks are predicted to increase by 42% by 2026. 

With this increase, many retailers are concerned with managing chargeback volume during the busiest time of the year — the holiday season. With the 2023 holiday season quickly approaching, we wanted to share some tips to prepare your chargeback strategy for this holiday season. 

Tip 1: Take Advantage of Visa CE3.0

In April, Visa released Compelling Evidence 3.0. With this update, Visa is recognizing that first-party fraud is increasing and that retailers require additional leverage to prove that a cardholder participated in a transaction. Visa’s CE3.0 requirements enable retailers to submit additional compelling evidence to establish the cardholder’s history of prior, legitimate transactions. 

This additional compelling evidence can be submitted pre-dispute (before a chargeback occurs) or post-dispute as part of the chargeback process. Retailers should look to take advantage of Visa CE3.0 before the holiday season by leveraging a solution that automatically consolidates historical evidence into the representment templates — so they can shift liability for qualified chargebacks. 

Tip 2: Know Your Metrics

Retailers may be using different systems to calculate key metrics, especially win rate. Before the holiday season starts, knowing exactly what goes into your most important metrics is important to ensure that you are showing value.

At Forter, we consider the true win rate as the one that reflects the revenue that is permanently recovered in relation to all revenue lost to chargebacks. Therefore, we only consider a chargeback ‘won’ after it has been closed with a final chargeback cycle status decided in the retailer’s favor and funds returned to the retailer. 

Other methods for calculating win rates include a response win rate, where each cycle result contributes to the calculation and a month-over-month win rate, where retailers simply look at chargebacks won this month over chargebacks disputed in the previous month. The issue with both of these methods is that they do not accurately show when revenue is permanently recovered or not, which can make the results misleading.

Retailers should consider calculating their true win rate before the holiday season to identify any opportunities to improve their strategy before the holidays start. 

Tip 3: Address Abuse Weaknesses

Around the holiday season, it is becoming increasingly common for retailers to share with us that their customers are double-dipping, where they submit a chargeback while also requesting a refund from the retailer. Getting ahead of these abuse weaknesses is important prior to holiday amplification. 

Depending on the challenges a retailer is experiencing, there is flexibility in how to mitigate them. At the point of checkout, retailers can choose to proactively mitigate abuse by identifying abuse patterns to prevent purchases from known abusers. After a purchase, retailers can reactively combat abuse by adding key evidence (such as shipping labels, delivery notifications, or refund status) in their chargeback disputes. In addition, they can also choose to customize their responses to potential abusers. For example, they can make the decision to only issue a refund once the returned goods are checked at the warehouse. 

Tip 4: Leverage Automation to Minimize Manual Processes

One of the main challenges we hear from retailers regarding the holiday season is scalability. Many need to hire contractors, reallocate resources, or choose to fight only a subset of their chargebacks. Often, it’s the manual processes that cause these scalability challenges. Thus, more and more retailers are looking towards automation.

Luckily, in every step in the dispute process, there is an opportunity to leverage automation — from claims ingestion and evidence gathering to submitting letters and tracking KPIs. With automation, teams should be able to dispute 90% or more of chargebacks and fight disputes in 0 to 5 minutes. 

Some retailers may choose to automatically dispute all of their claims, while others prefer a personal touch on their higher AOV disputes. It’s important to look for a solution that gives you the flexibility to choose where your business wants to sit on the automation spectrum. 

Forter Chargeback Recovery 

Forter’s holistic platform delivers complete end-to-end digital commerce protection. Our deep understanding of identities unlocks our ability to approve more transactions, reduce chargebacks, deter friendly fraud, recover lost revenue, and automate manual tasks to increase operational efficiency. 

Chargeback Recovery connects order and claims data across payment methods and processors to fight chargebacks. Chargeback Recovery benefits from the power of Forter’s fully automated decision engine to help retailers dispute claims intelligently. To learn more about Chargeback Recovery, click here