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Before Outsourcing Your Chargeback Management, Ask These Questions

Mark Standfield
Mark Standfield

Outsourcing to a chargeback management professional has numerous and significant benefits.

If you are shopping for a chargeback management service provider, you have a big decision ahead of you. If you choose the wrong provider, you could be locked into bad service for years, potentially causing you to spend 10 times more on management than you lose to chargebacks. If you want to find a chargeback management service that is perfect for your business, ask these questions during the evaluation process.

Editor's Note: Looking for credit card processing for your business? If you're searching for information to help you choose the one that's right for you, use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of processors for free:

Questions about automation

The more automation, the better the outcomes, the higher the ROI and the lower the costs. The first thing you should do is find out if the service provider uses technology or manual processes.

Q: Which tasks do you automate?

Answer you want to hear: Chargeback management technology should be used to automate as much as possible. Examples of things that can be automated include: receiving chargeback notices, matching chargebacks to their original orders, submitting chargeback responses, blacklisting customers, canceling future billings, refunding prevention alerts, notifying alert vendors, etc.

Q: Which tasks are completed manually?

Answer you want to hear: If the service provider uses a combination of automation and manual labor, there should be full disclosure for all manual processes, as manual processes introduce opportunities for error. The less automation, the less impressive the results.

Q: What will my in-house team be responsible for?

Answer you want to hear: The service provider should make it clear where automation ends and manual processes begin so you know exactly what your responsibilities are. Also, the technology should make your responsibilities as easy as possible so you aren’t expected to complete tasks that are outside your area of expertise.

Questions about services

Services should be customized to your needs and business objectives.

Q: What do you do to prevent chargebacks?

Answer you want to hear: Your chargeback management service should incorporate prevention alerts from both Ethoca™ and Verifi™, as well as responses from Visa Merchant Purchase Inquiry. You’ll need detailed analytics so you can identify the root cause of your chargebacks. A blacklist can help stop repeat offenders. And, your account manager should be able to help you critique the value in additional services as they relate to your business (such as AVS, 3D Secure, etc.).

Q: Can you help with friendly fraud?

Answer you want to hear: Services should include effective prevention and responses for friendly fraud.

Q: Do you fight chargebacks?

Answer you want to hear: You should receive comprehensive services to both prevent and fight chargebacks from within the same portal.

Q: Do you help with card-present chargebacks too, or just card-not-present?

Answer you want to hear: Chargeback management software can integrate just as easily with the point-of-sales system that handles your card-present transactions as the CRM that houses your card-not-present transactions.

Questions about reporting

Every chargeback you receive contains a wealth of valuable insight. Make sure you’ll have access to plenty of relevant, real-time data.

Q: What kind of reporting do you offer?

Answer you want to hear: Reporting should be detailed, but relevant. You don’t need to waste time and effort trying to find valuable insight. Reporting should also be done in real time. Otherwise, easily-fixable problems could turn into liabilities before you uncover them. Lastly, every service you receive should include reporting – receiving chargebacks, processing prevention alerts, submitting dispute responses, etc.

Q: How do I access the data?

Answer you want to hear: All data should be available within the chargeback management platform. You shouldn’t receive information solely via email or exported CSV files.

Questions about consulting

Will you have access to industry experts or will you have to fly solo?

Q: Do you have consulting services?

Answer you want to hear: A dedicated account manager should be available to answer questions and help you analyze your chargeback situation.

Q: What do I do if I need help with something?

Answer you want to hear: In addition to your account manager, you should also have access to a platform for reporting bugs and a helpful, educational knowledge base.

Questions about outcomes

Before you sign on the dotted line, make sure you know what the service provider is and isn’t capable of achieving.

Q: What will my win rate be?

Answer you want to hear: Your win rate should be 60 to 80 percent. However, win rate is only one of several important KPIs you should be monitoring. Make sure you will also have a high ROI.

Q: What is your average ROI?

Answer you want to hear: Merchants using chargeback management technology often report an increase in ROI of 800 to 1,500 percent.

Q: How do I know if a chargeback response won or lost?

Answer you want to hear: The chargeback management service provider should include detailed reporting on chargeback outcomes, including information on win rate, amount of revenue recovered, chargebacks not fought, etc.

Q: Are there any chargebacks you won’t fight?

Answer you want to hear: The service should include selective fight rules; you should not fight every chargeback that comes through. The service provider should use technology that would allow you to optimize fight rules for ROI. This means passing on cases that cost more than you’ll recover, that have expired or are otherwise un-winnable.

Q: Do you offer any guarantees?

Answer you want to hear: The service provider needs to have complete transparency over what is and isn’t covered by a guarantee. Promises to refund chargeback losses usually come with several stipulations.

Questions about security

Data security should be a top concern for any service provider you work with.

Q: Do you store full credit card information?

Answer you want to hear: There is no need for a chargeback management service provider to access or store full credit card data.

Q: Are you PCI-DSS compliance?

Answer you want to hear: If the service provider does store full credit card data, they need to be PCI-DSS compliant.

Q: Have your data security standards been audited by a third-party?

Answer you want to hear: All service providers should have established data security standards that have been evaluated by a third-party, whether that is PCI or another auditing organization.

Questions about integration

A quick and easy integration process means you can start using those excellent services as soon as possible.

Q: What platforms will you integrate with?

Answer you want to hear: A full-service chargeback management service provider will integrate with your payment processor or gateway to receive chargeback notices on your behalf and your CRM (or order management system) to collect the compelling evidence needed to submit a response. The service should also be able to incorporate other tools like prevention alerts and Visa Merchant Purchase Inquiry.

Q: What information do I need to provide to integrate?

Answer you want to hear: Integration requirements will vary, but you’ll need to share information that will allow the technology to access your payment processing accounts and your CRM – usually login and/or API credentials.  

Q: How many development resources will my in-house team need to provide?

Answer you want to hear: A chargeback management service provider should be prepared to do the bulk of the technical work. Once you’ve provided the necessary access information, integration should basically be plug-and-play.

Q: What information will you need from my CRM?

Answer you want to hear: If the service responds to your chargebacks, it will need access to anything consider “compelling evidence” – emails, delivery confirmation, etc.

Q: What if I don’t want to connect my CRM?

Answer you want to hear: The best results are achieved through automation, and full automation would require access to your transaction information. However, if you don’t want to disclose this information, the service provider should have alternate options that allow you to maintain control over your data and provide partial automation.

Q: Will you do a custom integration?

Answer you want to hear: The chargeback management service provider should have several existing integrations that can be accessed via an API. If the platform hasn’t already integrated with your CRM, a custom integration might be available. Typically, these projects have minimum volume requirements.

Q: How long will integration take?

Answer you want to hear: Integration timelines will vary based on the services you are interested in and the APIs that have already been developed. You should be up and running within a few days to a few months.

Questions about account management

Human interactions and top-notch customer service are important, even if you are buying automated technology.

Q: Do clients have a dedicated account manager?

Answer you want to hear: You should have a dedicated account manager – someone who understands your business and your goals.

Q: What is involved in the onboarding process?

Answer you want to hear: The onboarding process should include training on how to use the chargeback management service and an introduction to your account manager.

Q: How many user accounts will we have?

Answer you want to hear: The best service provider will allow for an unlimited number of user accounts or “seats” without any additional costs.

Questions about prices and payment terms

Price is often a deciding factor, but remember the old adage: “You get what you pay for.” Ultimately, your goal should be to find a service provider that has the best ROI, not the cheapest price tag.

Q: What are your prices?

Answer you want to hear: Prices should be completely transparent, straightforward and easy to understand. Integration and cancellation fees should be disclosed too.

Q: How often will I be billed?

Answer you want to hear: The best chargeback management service providers will be flexible and willing to meet your needs.

Q: What are the contract terms?

Answer you want to hear: Ideally, contract terms would be month-to-month. However, if you commit to using the platform for at least a few months, you can test features to their fullest potential.

Q: What if I want to cancel?

Answer you want to hear: You should be able to cancel at any time.

Which chargeback management service provider is right for you?

Outsourcing to a chargeback management professional has numerous and significant benefits over manual processes. Schedule demos with the available service providers, ask detailed questions and find a platform that works best for your business objectives.

Image Credit: Seksan 99/Shutterstock
Mark Standfield
Mark Standfield Member
Mark Standfield started in the payments industry in 2003. In 2015, Mark joined Midigator, the leading developer of friendly fraud and chargeback prevention technology.