Introducing: Chargeflow Alerts
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Chargeback Alert systems such as CDRN alerts and Ethoca alerts offer significant chargeback protection to merchants. But there are downsides you should know.
If you’re not new to the eCommerce world, you already know that chargebacks cost merchants 3x the transaction value. If not handled carefully it would also deteriorate all vital customer experience.
That’s a fact.
Chargeback is a merchant’s nightmare: you can lose your business due to excessive chargebacks.
It’s virtually impossible to catch every fraudulent transaction or suspicious order, no matter how much effort you put into it.
These fraudulent orders eventually translate to financial losses and administrative fees due to chargebacks. And poor information flow and collaboration between issuers and vendors is one key culprit for such losses. So, a vital part of protecting your revenue is to make sure you have the right strategy tackling friendly fraud chargebacks.
That is where chargeback alerts come in.
Chargeback alerts facilitate real-time communication between card issuers and merchants. It helps the stated parties collaborate to mediate chargebacks outside the payment authorization channel.
Dig in for more information on chargeback alerts.
We shall cover Cardholder Dispute Resolution Network chargeback alerts in more specific terms and how the CDRN system works.
What are Chargeback Alerts?
Chargeback Alerts are a dispute mediation tool that helps merchants resolve customer dissatisfaction before they turn into costly chargebacks. Chargeback management specialists that provide these alerts work closely with financial institutions to deliver notifications of impending chargebacks to vendors, especially in case of fraudulent transaction.
The merchant then has ample time (between 24-72 hours) to resolve the issue and avoid chargebacks.
It’s crucial to note that chargeback alerts are not the same as chargeback notifications.
While a chargeback notification is a letter informing the merchant about an actual customer dispute that a cardholder has already filed, a chargeback alert gives the merchant information about a potential case before the customer initiates them. Think of the latter as a forewarning of a potential dispute.
How Do Alerts Help Prevent Chargebacks?
Chargeback alerts close the information gap between merchants and issuers to reduce chargebacks.
Instead of merchants waiting for 3 to 6 weeks – at which time it might already be too late to make a move – CDRN alert pings them about an impending potential chargeback in just a couple of minutes, hours, or days.
Here's how it works.
Immediately the service provider receives the cardholder documentation from the card issuers, they create an alert and transmit the same to the affected vendor.
You, the business owner, can then use that information to thwart the order process for payment protection and prevent management fees and other ancillary chargeback charges.
With all that said, we must also inform you that chargeback alerts aim to help vendors proactively refund and mediate legitimate chargebacks to prevent chargebacks. That potentially reduces the processing fees for cases the merchant does not expect to win. Equally vital, if the customer is a victim of payments fraud on any payment processor, such proactive dispute mediation offers a better user experience by effectively returning the money to the actual card owner.
While a refund should not be your expected outcome, refunding the customer shields your company against the potential loss of processing rights incidental to elevated chargeback cases.
In the subsequent sections, we review the two major networks providing chargeback alert solution:
#1: Verifi CDRN Alerts
Verifi Cardholder Dispute Resolution Network (CDRN) is a chargeback management program that provides merchants with an advance chargeback notice as prevention alerts.
CDRN intercepts disputes on your behalf before they turn into full-blown chargebacks. Merchants that subscribe to the system get CDRN alerts when a cardholder tries to initiate a dispute with their card network.
Verifi CDRN acts as an intermediary between banks/issuers and merchants to detect cardholder disputes set in motion by participating card issuers. The system intercepts pending cases and alerts the merchant ahead of time.
The vendor then has a brief moment during which the dispute process stops. If they successfully remediate the case, they can avoid the chargeback altogether. The prior notice also helps the merchant to prepare for representment if they believe the chargeback is meritless or fraudulent.
#2: Ethoca Alerts
Ethoca Alerts is a proprietary chargeback management product as a alert network of Ethoca.
Like CDRN alerts, Ethoca Alerts intercept and interrupts the progression of cardholder disputes set in motion by participating card issuers.
The system identifies an incoming chargeback with almost real-time accuracy and notifies you so you can remediate the case instead of letting it turn into a chargeback.
It stops the case from being escalated to an outright chargeback immediately after it begins with the card issuer. And you have the opportunity to resolve it outside the payment authorization channel. That is, without involving your acquirer, thereby avoiding administrative charges and hits to your chargeback ratio.
In a nutshell, these alerts help you choose your preferred course of action for a cardholder dispute.
But you should also know that the service is not free.
Verifi CDRN and Ethoca Alerts attract a definite fee per alert, irrespective of your response. Considering these costs, it pays to do your due diligence before choosing an alert service provider.
Verifi CDRN and Ethoca Alerts: Similarities and Variances
While there is a significant overlap between CDRN alerts and Ethoca alerts, some variances also exist.
- Both networks work with a wide array of card issuers, which makes it possible for them to offer extensive protection with chargeback alerts.
- Vendors will not receive a chargeback alert from a card issuer that’s does not belong to the network.
- The response time limit for merchants is between 24 to 72 hours of receiving an alert – failure to respond means the case will proceed to a chargeback.
- Both networks charge the vendor $40 for an alert.
- Verifi covers card issuers in the United States.
- Ethoca's network stretches across banks in Europe, Asia, and Canada.
Some vendors find more value in onboarding both services for better coverage. The caveat is to pay attention to cost/benefit side of things. You might have double dispute alerts, meaning double fees, when a cardholder initiates a dispute at a bank belonging to both service providers.
Is CDRN Alert the Ultimate Solution for Chargebacks?
CDRN alerts are unquestionably needful in helping merchants prevent some chargebacks. And if you already encounter chargeback losses, you should consider enrolling for CDRN alerts as it will reduce the occurrence of chargebacks.
Yet, they’re not a reliable long-term dispute mitigation strategy for comprehensive protection.
For one, the alerts cannot address the causes and sources of your chargebacks or consumer dispute. They only tell you there’s a potential case coming your way. Neither do they help you limit lost transaction revenue and goods.
Also, the number of years you’ve been in operation plays a crucial role in the quality of the coverage you get. Established vendors get better protection than rookie merchants. As we noted earlier, that means spending more money and often dealing with duplicate alerts and bills from both Ethoca & Verifi.
A surer way to recover chargebacks without breaking the bank or alienating legitimate customers is to automate your chargebacks.
Research has shown that vendors using automated chargebacks recieve an ROI increase of 800 to 1,500 percent.
With chargeback automation like Chargeflow, you can:
- Effectively track suspicious transactions with order insights and AI-generated customer buying behavior.
- Efficiently manage the entire chargeback process and recover disputes on autopilot – with insight from over 50 data points.
- Easily see user transaction behaviors, plug loopholes, forecast transactions that could result in chargebacks in the future, manage your revenue efficiently, and better align your strategies with changing fraud dynamics.
That’s not all.
Our data shows that merchants using our fully automated chargebacks get an average of 75%-win rate instead of the industry average of 12%.
How do I receive chargeback alerts?
Chargeback alerts can be received via email, SMS, or through an online portal or dashboard provided by the alert service provider. The method of delivery may vary depending on the provider you choose and your preference.
What information does a chargeback alert contain?
Chargeback alerts typically include details such as the date and amount of the transaction, the reason for the chargeback, and the cardholder's name and contact information. The exact information provided may vary depending on the provider and the specific alert.
Can chargeback alerts be automated and integrated into my current systems?
Yes, many chargeback alert providers offer integration options with other systems such as your e-commerce platform or payment gateway. This allows for automatic and seamless receipt and processing of chargeback alerts.
How do I dispute a chargeback that was raised through a chargeback alert?
The dispute process for chargebacks raised through alerts will vary depending on the provider and the specific alert received. Some providers may provide instructions on how to dispute the chargeback directly within the alert, while others may require you to follow a separate dispute process.
How secure is my sensitive information in the chargeback alert process?
The security of sensitive information during the chargeback alert process will depend on the provider you choose. It is important to research and choose a reputable and secure provider that follows industry-standard security protocols.
What are the costs associated with receiving chargeback alerts?
The cost of receiving chargeback alerts will vary depending on the provider and the specific plan or package you choose. Some providers may offer alerts as part of a larger service package, while others may charge a fee for each alert received.
Can I customize the type of alerts I receive and how I receive them?
Yes, many chargeback alert providers offer customization options for the type of alerts you receive and how you receive them. This may include options such as the frequency of alerts, the type of transactions to be alerted for, and the method of delivery (e.g. email, SMS, online portal).