Daryn Griggs – CEO, PayShield
September 11, 2020

The adaptation of an effective dispute and chargeback management strategy should remain a top priority for all payment industry players, should they wish to succeed post-pandemic. According to Aite Group, chargeback disputes were already on the rise prior to COVID-19, estimating cost of global disputes would reach $35 billion in 2021, up from $23 billion in 2018. Further to this, it was reported that approximately 80% of all chargebacks were fraudulent with figures suggesting CNP fraud was also set to rise from $4.4 billion in 2018 to $6.4 billion in 2021.

The recent spike in dispute filings, initially fuelled by travel-related cancellations, shows no sign of slowing post-pandemic. Compounded further by a shift in consumer behaviour that now favours CNP transactions, increasingly unstable market conditions, virus-driven buyer uncertainty and greater opportunistic attacks from bad-actors. It is imperative that businesses act now to protect against unnecessary losses and avoid damaging relationships with their customers long-term.

Managing the Dispute Process with PayShield

Traditionally, when a cardholder disputes a transaction with their bank, the bank enters the dispute into the VISA or MasterCard dispute platform and a chargeback is issued, resulting in additional fee.

PayShield’s new automated dispute alert service improves the efficiency and effectiveness of a company’s dispute resolution strategy. The alert service provides an instant notification to PayShield from Visa or Mastercard when a customer files a dispute against a merchant within the PayShield network. From the point of receiving the notification, the merchant & PayShield have up to 72 hours to respond and resolve the dispute before it becomes a chargeback.

Visa and MasterCard chargeback thresholds are 0.9% and 1% respectively (that is chargeback to transaction ratio in any given month). If a merchant meets or exceeds these thresholds they may be forcibly placed by the card network into one of their Chargeback Monitoring Programs. Recent changes to these thresholds have narrowed the margin of error making it easier than ever for merchants to breach thresholds and find themselves in a program, where exorbitant fines and loss of merchant account is a very real risk.

PayShield Dispute Alerts mitigate this risk by providing merchants with valuable time to respond and resolve disputes before they become a chargeback, effectively keeping them below VISA & MasterCard thresholds, out of monitoring programs and protected from significant financial loss associated with the standard chargeback cycle.

Many players in the Financial Services industry are missing out on the opportunity to improve, If you would like to know the true cost of chargebacks on your business, we welcome you to fill out our chargeback appraisal form and we will provide you with a detailed report of the number of chargebacks your business has received in the past 3 months and how many of those PayShield could have prevented.

Reduce the risk of detracting value from your network by providing effective chargeback mitigation through the efficient prevention, management, and resolution of disputes. If you are struggling with high chargebacks, keeping merchant accounts or have any questions about how a dispute alert service can benefit you and your business, please don’t hesitate to reach out to us for help. PayShield offers a broad range of solutions and support services to help all stakeholders in the ecommerce industry.