Chargeback alerts are early notifications sent by card networks such as Visa and MasterCard when a customer raises a dispute with their bank. They provide insight to merchants for when to refund a transaction at the pre-dispute stage, allowing you to avoid the reputational hit of a dispute and their fees.
There are two major providers of these alerts:
Chargeback Alert Providers
Ethoca Alerts
Ethoca Alerts - Which provide coverage for majority of MasterCard disputes and between 30-40% of Visa disputes can also come through the Ethoca network.
These alerts are delivered to the merchant and the merchant has typically 48-72 hours to refund the transaction and mark as resolved. These refunds are done either automatically by chargeback management software or your own team.
Verifi RDR
Verifi RDR - Which provide coverage for majority of Visa disputes.
These alerts are resolved automatically by the Visa network. You'll publish a set of rules e.g Anything less than or equal to $100, and when a disputes comes into the Rapid Dispute Resolution (RDR) network Visa will trigger a reversal of the funds if these rules are met. This means that refunds are automatic which speed up resolution and reduce effort however you do not have control of individual cases.
A comprehensive chargeback prevention strategy will mean you need both Ethoca and Verifi in order to help keep control of your chargeback rate and maintain healthy processing accounts.
The recommended chargeback rate for most merchants is to stay under 0.5%. This means for every 200 transactions you must have no more than 1 dispute.
If you're struggling to stay within this ratio you could risk your merchant account and reputation with the card networks. One solution here is to work with a chargeback management software company such as ChargebackStop which help merchants prevent chargebacks.
