In today’s omnichannel market environment, when a consumer completes a digital transaction and has a problem with the purchase she typically doesn’t know whom to contact. Since she has flagged the transaction on her billing statement, her first choice of contact is the issuer rather than the merchant.
The reason for this is quite clear. The card-not-present (CNP) business model doesn’t require direct interaction between the merchant and the consumer. And since the issuer does not have enough information to resolve the consumer’s dispute, too often the inevitable result is a chargeback.
Clearly, this is not a process that works best for consumers, merchants or issuers. No one comes out ahead when a query escalates into a chargeback. Consumers are frustrated, issuers risk brand erosion, and merchants lose revenue which compels them to raise prices – further impacting consumer purchase behavior.
The entire dynamic can change by opening the lines of communication between consumers, merchants, and issuers to resolve disputes before they become chargebacks.
The Consumer-Merchant Relationship
Merchants must put solutions in place to make them available and accessible to consumers for all transactions. This is particularly important for CNP purchases.
The importance of establishing better communication is reinforced by a recent Javelin Strategy & Research report, which found in more than 8 in 10 cases contacting the merchant first prevents a chargeback.
The research also detailed these realities of the consumer-merchant relationship:

  • 76% of consumers bypassed merchants in suspected fraud cases.
  • 72% of CNP merchants believe that consumers bypass them and directly dispute the transaction with the issuer.
  • 56% of merchants can pre-empt a chargeback or refund/return when the consumer contacts them first.
  • 45% of consumers have disputed one transaction in the past year.
  • 25% of consumers have disputed more than one transaction in the past year.

The number of consumers who disputed a transaction in the past year is telling, because chargebacks cost merchants and issuers $31 billion in 2017 – with $19 billion absorbed by merchants. This shines a light on the importance of merchants changing how they communicate, both with consumers and issuers.
The Javelin Strategy & Research report emphasizes that most consumers dispute transactions due to delivery problems, such as an incorrect or damaged item. In these instances, merchant involvement early in the process is critical for preventing chargebacks.
How Merchants Can Eliminate Consumer Communication Gaps
CNP merchants can make significant inroads to avoid unnecessary transaction disputes by employing the basics of good customer service. This reinforces to consumers that the merchant cares and wants to solve their problems.

  • Order review. Before finalizing an order, review it carefully to ensure there are no duplicates in the system or emails from the consumer following the transaction that could impact fulfillment.
  • Confirmation emails. A confirmation email offers the consumer a way to contact the merchant. Be sure to include an option to change or cancel the order.
  • Act quickly. When a consumer sends an email or opens a chat, respond quickly. In the case of a request for a refund, do this as quickly as possible and keep the consumer updated throughout the refund process.
  • Shipping details. Consumers often feel disconnected when they don’t know when their order will arrive. Provide clear shipping details including a tracking number, an estimated delivery date and time, and send a confirmation email (or text) when the item is delivered.
  • Be available. Clearly display customer service contact information on the website (the footer is a good location). A chat window is an effective tool to address consumer questions . Respond to emails and social media posts quickly.
  • Flexible communication. Know how your customers want to communicate and be contacted. Some prefer email while others prefer text or a phone call. Have several options available to raise their comfort level.

Merchants must evolve with consumer demands and expectations and provide the right information for the right parties at the right time to resolve transaction disputes before they become chargebacks.
Collaboration solutions like Verifi’s Order Insight™, which connects consumers with merchants and issuers with relevant transaction information, are the most effective tools for resolving consumer confusion quickly and effectively.
Contact Verifi to learn how you can provide consumers with the right balance of communication and information to reduce chargebacks, protect your revenue, and turn potentially brand damaging experiences into brand building opportunities.


There’s no question that the chargeback process is complex and needs fixing. The impacts of chargebacks go beyond merchants and issuers, extending to customer service personnel and consumers.
It takes a commitment by merchants and issuers to open the lines of communication and a willingness to become true partners to solve the industry’s $31 billion chargeback problem.
If successful, merchants and issuers can collaborate, help themselves, and succeed in keeping customers happy and loyal. The objective for both merchants and issuers is to prevent a transaction dispute from escalating into a chargeback and maintaining a lasting customer relationship.
How to Create Effective Chargeback Prevention
As explained in the Verifi-sponsored Javelin Strategy & Research report, The Chargeback Triangle, addressing the challenge of chargebacks requires coordinated effort among the three primary parties in the dispute – the merchant, the issuer, and the consumer – comprising the chargeback triangle.
When solutions are in place that enable open communication, information-sharing, and proactive chargeback prevention, everyone wins. Merchants can better focus on their core business and dedicate fewer resources to chargeback management. Issuers can improve their relationships with merchants and prevent costly drains due to dispute processing. Consumers enjoy an enhanced experience and are more likely to remain loyal to merchants and issuers who proactively solve their problems.
The key is having the right tools, solutions, and mindset to make the chargeback triangle work toward mutual benefit. By understanding the full benefits of merchant-issuer collaboration, each can reduce the cost of chargebacks.
The Chargeback Triangle offers several recommendations that can drive success.

  • Information-sharing is key. Sharing transaction data allows merchants and issuers to make better decisions about which disputes to pursue. Merchants can reduce investments in manual processes, and issuers can get ahead of consumers who are abusing the dispute process.
  • Connect the customer with the merchant. When there are problems with the goods or services, issuers should direct the consumer to the merchant who has the information needed to help solve the customer problem.
  • The more the data the better. Issuers can help their customer service team by collecting as much data as possible about the problem before connecting the consumer with customer service. This can solve the problem in a single phone call.

When they don’t recognize a credit card charge or have questions about a purchase, consumers typically feel their only recourse is to file a chargeback with the issuer. But merchants can avoid this costly process by using solutions to support merchant-issuer collaboration and take steps to improve customer communication.

  • Better billing descriptors. Prevent forgotten or unrecognized purchases and subscription renewals with full product details. Include information such as the item and date of purchase, and specific product details like size, quantity, color, etc.
  • Customer history. Have easy access to the customer’s transaction and dispute history, including disputes filed, refunds issued, and account delinquency to enable merchants to identify repeat fraud offenders.
  • Merchant details. Provide complete merchant details on the consumer’s credit card statement, including name, address, and customer service phone number.
  • Device information. Prevent customer confusion over how and when the purchase was made by including the device type and name used for the purchase.
  • Cardholder information. Clear up the billing confusion by providing as much unique cardholder information as possible, including the IP address, phone number, email address, name, and username.

Chargeback Triangle Success Points
Honest consumers simply want their questions answered and problems solved. When this happens quickly and smoothly, they remain loyal customers and are less likely to post negative reviews or social media comments.
On the flip side, many consumers feel like they’re getting the run-around from the merchant and issuer leaving them disgruntled with the entire experience. This is why merchant-issuer collaboration is so important to deliver a superior customer experience.
Contact Verifi to learn how our payment solutions, including Order Insight and CDRN, enable a proactive and collaborative chargeback prevention environment that helps protect your revenue.


According to the recent Javelin & Strategy Research report, The Chargeback Triangle, chargebacks were a $31 billion problem in 2017. Unless this cycle of costly chargebacks is broken, the problem will continue, if not worsen, in 2018.
The cost of transaction disputes is not limited to merchants and issuers – consumers also suffer. Remember, many consumers file chargebacks because they simply don’t know whom to contact with their questions about a credit card charge, or they get frustrated when their questions go unanswered.
On the positive side, there are some very effective ways for merchants and issuers to reduce chargebacks. We’ve put together some valuable tips for you to read on reducing and even preventing chargebacks, which can be readily implemented to help protect your revenue and improve customer loyalty.
How to Reduce Transaction Disputes and Chargebacks

  • Support information-sharing. Engagement in sharing transaction information between merchants and issuers will streamline the dispute process and help avoid chargebacks.
  • Issuers should connect consumers to merchants. When the dispute involves questions about the quality of goods or services, the merchant is the best and most logical contact point to effect a quick resolution.
  • Merchants need to communicate proactively. Positive engagement initiated by the merchant, even after a chargeback, goes a long way to help bolster the merchant-consumer relationship.
  • Ensure Customer Service has relevant data. The more information the customer service team has for the initial inquiry, the more effective the dispute resolution process can be. In some cases, customer service can resolve a dispute in a single phone call.
  • Give consumers control. With an app or other tracking tools, consumers can self-monitor the transaction resolution process. This reduces the number of calls to and from customer service.
  • Always confirm the transaction details. Merchants should send a confirmation email that provides complete transaction details and allows the consumer to make changes or cancel the transaction.
  • Track and follow the purchase. When the order is ready for shipment, the merchant should send a shipment notification email. This reminds the consumer of their purchase and allows both the consumer and the merchant to track the delivery.
  • Remember social media. Merchants and issuers need to remember that consumers use social media channels to ask questions, voice complaints, and provide feedback. Be responsive to concerns to avoid negative reviews or public complaints.
  • Be honest and forthright. Consumers appreciate honesty and consistent follow-through on merchant and issuer promises. Making that extra effort goes a long way towards strengthening the customer relationship.

Contact the Verifi team to learn more about how our collaboration solutions can help protect your revenue and improve customer experience.


For merchants and issuers, the all-mighty consumer is the center of their universe. But knowing what consumers want, when they want it, and how much they’re willing to pay are the elusive aspects of a complex equation. Managing consumer chargebacks and understanding why consumers file them can be a particular challenge unto itself – but paramount to success.
Follow the trail of consumer chargebacks and you’ll invariably discover a tangled web of misunderstanding, poor communication, mistrust, and anger. This leads not only to losing the individual transaction but to long-term revenue damage, as consumers abandon merchants and issuers for other options.
To manage consumer disputes, merchants and issuers must collaborate with each other. With better communication, sharing of information, and a commitment to reducing disputes, everyone wins – including the consumer. To understand the importance of collaboration, merchants and issuers must acknowledge the true cost of consumer disputes, as chargeback costs pose a significant threat to their business.
The Facts on Chargebacks
Chargebacks have become a $31 billion problem which merchants, issuers, and consumers faced in 2017. The recent Javelin Strategy & Research report, The Chargeback Triangle, examines the impact chargebacks have on all affected parties. Merchants suffer revenue loss and consumer attrition. Issuers incur liability costs, consumer loss, and uneasy relationships with merchants. Consumers face rising prices as a result of the mounting costs of chargebacks, the loss of long-term merchant relationships, and increasing concerns over credit and debit card fraud.
The Chargeback Triangle provides a clear picture of what everyone involved in consumer sales and disputes faces.

  • Chargeback costs are not evenly split. Chargebacks cost merchants $19 billion and issuers $12 billion.
  • Liability costs add up for issuers. 60% of total chargeback costs is in combined liability for credit, debit, and prepaid chargebacks.
  • Chargeback management costs drain merchants. 60% of merchant chargeback-related costs are in management expenditures.
  • One dollar translates to $1.50. For every dollar disputed, merchants and issuers spend an additional $1.50 on fees and management expenses.
  • Cardholders bypass merchants. In 76% of fraud-related disputes, consumers bypassed the merchant and contacted the issuer directly.

The Chargeback Tightrope
Consumer disputes and chargebacks are touchy subjects for merchants and issuers. While both agree that the chargeback and dispute process is broken, neither group has been willing to take steps into new territory to change this process.
In many dispute scenarios, a consumer addresses their problem by clicking the dispute transaction link in their online credit card statement. This can be viewed as fairly blameless behavior, since they don’t know what else to do and assume this is the correct, if not only, course of action.
The unfortunate fact is that because consumers do not know they can contact the merchant, they assume the merchant is to blame, or worse, doesn’t care about their concerns. This costs merchants on multiple levels, including lost revenue, consumer attrition, damage to brand reputation, and an increase in true fraud and friendly fraud.
Merchants know that in most non-fraud consumer disputes they can address the dispute and resolve it more effectively than the issuer. Whereas the issuer has no knowledge of the charge in question, the merchant typically has this information readily available. With the right customer service approach, merchants can solve consumer problems and prevent the chargeback from occurring.
The Value of Collaboration
In today’s payments climate, the best option to chip away at the industry’s $31 billion problem is to facilitate an open-door policy that allows merchants and issuers to communicate with each other directly on disputed transactions and consumer queries.
With a solution readily available, communication and information-sharing can be valuable tools for merchants and issuers. It’s time to put an end to the broken chargeback process. Contact the Verifi team to learn more about how our collaboration solutions can help protect your revenue and improve customer experience.


As more retailers implement omnichannel marketing to meet consumer demand, they are learning a hard truth. The card not present (CNP) business model, while enabling consumers to shop when they want, where they want, and how they want can break down as soon as a consumer files a chargeback with their issuer.
The consumer typically bypasses the CNP merchant and contacts their card-issuing bank to dispute a transaction, because in the CNP model they don’t even perceive a relationship with the merchant when making a purchase.
With a few clicks or swipes, consumers can make a purchase without ever communicating with the merchant. This casual business model collapses as soon as the consumer has a problem with their purchase, because they don’t know whom to contact or simply don’t trust their email will be answered with their grievance properly addressed. This establishes an environment that supports confusion, mistrust, and ultimately, unnecessary chargebacks.
When a consumer wants to challenge a transaction, now they can simply respond to the dispute charge link in their online credit card statement. Consumers perceive this as the only way they can remedy their dissatisfaction with their purchase.
It’s time to fix this broken and inefficient dispute process. To do this, merchants must understand why chargebacks are being filed and commit to open communication between themselves and consumers.
Why Do Consumers Dispute Charges?
Many consumer-initiated transaction disputes are due to two basic reasons:

  • Unrecognized purchases
  • True fraud cases

Often, unrecognized charges are the result of unclear or missing information. To avoid consumers defaulting to simply filing a chargeback, merchants should provide detailed transaction information in a confirmation email. Additionally, providing accurate billing descriptors can help reduce any confusion the consumer may experience on reading their statement.
The Verifi-sponsored Javelin Strategy & Research report, The Chargeback Triangle, provides insight into whom the consumer holds responsible when they dispute a transaction. When consumers are confused with a credit card charge or have issues with their purchase, they often hold the merchant accountable.

  • In 66% of non-fraud transaction issues, consumers blame the merchant
  • In 56% of fraud-related issues, consumers blame the merchant

In these situations, consumers bypass the merchant and work directly with their issuer, even when the problem could be fixed quickly by dealing directly with the merchant. To end this inefficient and costly cycle of often unnecessary disputes, merchants must establish a relationship with their consumers.
By connecting with consumers, merchants will not only prevent chargebacks, they’ll improve customer loyalty and longevity. Among merchants that track post-chargeback activity, 62% of consumers decreased their patronage with these merchants after they filed a chargeback. This lost business can become even a bigger issue if it escalates to negative social media reviews, resulting in brand damage.
Along with unrecognized charges, merchants also lose revenue due to friendly fraud and true fraud chargebacks. A key issue is that the lines between friendly fraud and true fraud can be quite blurry. Consider these examples:

  • The consumer doesn’t remember making the purchase
  • The item wasn’t delivered
  • The consumer returned the item and did not receive a refund
  • The credit card was compromised
  • The order was cancelled but the item was still delivered
  • The consumer regrets the purchase
  • The consumer’s family member made an unapproved purchase
  • The consumer has a premeditated intention not to pay
  • The consumer wants to discontinue recurring business with the merchant

These examples highlight how easy it is for consumers to dispute transactions, especially with CNP merchants. According to The Chargeback Triangle report, CNP merchants face 34% more friendly fraud chargebacks than card-present merchants. The nature of digital and in-app purchases allows the consumer to be predominantly anonymous, which makes it difficult for the merchant to confirm the validity of the purchase.  In addition, the consumer doesn’t have to provide an explanation for the chargeback in a face-to-face meeting, which makes the process very easy for them.
What Should Merchants Do to Prevent Chargebacks?
To prevent chargebacks, merchants need to establish the best business practices of maintaining clear, open communication with consumers. Ideally, to reduce and even stop chargebacks, merchants and issuers must work together to share information and communicate openly.
In 8 out of 10 cases, when a consumer contacts the merchant about a transaction issue, the dispute does not result in a chargeback. The best way to achieve this level of communication is with advanced payment solutions that provide consumers with the information they need to resolve a dispute before it escalates into a chargeback.
Contact us to learn how Verifi can provide the tools that you need to open the lines of communication with consumers and issuers.


Chargebacks are a $31 billion problem that impact merchants, issuers, and customers. From the customer’s general perspective, it may appear that merchants and issuers wield all the power when it comes to managing disputes. However, reality tells merchants and issuers that the true power player in this dynamic is the customer.
The customer is the one whom both merchants and issuers must keep happy and loyal to their respective brands. Any cracks in the merchant-customer or issuer-customer relationship can have severe consequences for both parties, respectively. The influence of unhappy customers runs deep, particularly with the wide net cast by social media, online review sites, blogs, and digital consumer forums.
What can merchants and issuers do to manage consumer expectations when cracking down on rampant transaction disputes, fraud chargebacks, and invalid chargeback claims? Within the current chargeback dispute process, merchants and issuers are challenged to connect with customers effectively to solve problems outside the dispute process and fight invalid chargeback claims. Currently, it’s an either-or scenario: spend valuable resources trying to connect with customers (and often fail), or cave to chargeback disputes and suffer the consequences.
It’s time for change throughout the chargeback system. Customer loyalty is at risk. Merchants are losing revenue. Issuers appease customers at the peril of their own bottom line. The growing, corrosive effects of disputes and chargebacks on customers, merchants, and issuers are analyzed in the recent Javelin Strategy & Research report, The Chargeback Triangle, commissioned by Verifi.
Why Customer Chargebacks Happen
Customers have choices when dissatisfied with or confused by a charge on their credit card. Often, their first instinct is to assume their credit card has been violated and dispute the transaction directly with their issuer. This places issuers and merchants in a difficult situation with limited time and resources to resolve the problem to mutual satisfaction.
At the root of the chargeback problem is the lack of communication and coordination between merchants, issuers, and customers.
As highlighted in The Chargeback Triangle, the lack of effective merchant-issuer communication and collaboration can damage brand loyalty.

  • Poor communication costs merchants. If a customer cannot effectively link a transaction to the business where it occurred, it can be very difficult for them to clarify the facts of the transaction and, therefore, they simply dispute it with their issuer.
  • Regardless of whether a dispute is related to fraud, consumers generally hold merchants most responsible.
  • Merchants suffer more customer attrition from chargebacks than issuers do from the disputes that spawn them. Of merchants that track post-chargeback activity, 63% of customers decrease their patronage.
  • Transaction disputes are common among customers with nearly half (45%) of them disputing at least one transaction in 2017, and 25% have disputed more than one.

How to Improve Customer Loyalty
By sharing transaction data and by providing merchants and issuers the capability to connect immediately with customers – much of the confusion customers experience with payment card billing can be eliminated.
With open communication and collaboration, chargebacks can be avoided. Simply answering customer questions and addressing concerns about a transaction enables merchants and issuers to transform a potentially negative experience into a positive one and keep customer loyalty intact.
Contact us to learn more about Verifi’s collaboration solutions and how we can help improve fraud and chargeback management for your business, to protect your revenue, increase profits, and improve overall customer experience.


The numbers don’t lie. Chargebacks are a $31 billion problem that hurts merchants, issuers, and consumers.  But it is solvable if merchants and issuers take the necessary steps to make a change.
The groundbreaking Verifi-sponsored Javelin Strategy & Research report, The Chargeback Triangle, digs deep to reveal the real chargeback issues and offers recommendations to address the broken chargeback process.
The data in The Chargeback Triangle is based on a 2017 online survey of 2,000 U.S. consumers, 300 executives influencing chargeback policy at U.S. merchants earning $10 million and greater in revenue, and 200 executives influencing chargeback policy at card-issuing U.S. retail financial institutions.
The report builds upon these industry facts:

  • Merchants bear two-thirds of chargeback costs at $19 billion
  • Issuers absorb the remaining $12 billion in chargeback costs, which includes $7.1 billion in liability
  • 45% of consumers disputed a transaction in 2017
  • The real chargeback cost is that for every $1 disputed, merchants and issuers incur an additional $1.50 in expense

Compounding these figures are the long-term losses that result from an erosion of consumer brand loyalty, particularly for the merchant. Research confirms that regardless of the chargeback dispute outcome, more than half of consumers (56%) hold the merchant responsible for the dispute.
Fixing the outdated and inefficient chargeback system requires a new approach that relies heavily on merchant-issuer-consumer communication, collaboration, and data-sharing.
Merchant-Issuer Collaboration for Chargeback Prevention
Addressing the challenges inherent in the chargeback system demands a coordinated effort among merchants, issuers, and consumers to form what has been coined as the Chargeback Triangle.
When merchants and issuers work together to share dispute, transaction, consumer, and other relevant data, they can preempt and eliminate the costly burden of the formal chargeback dispute process.
When consumers contact the merchant first to discuss problems with their transaction, order, or delivery, merchants have a much better chance to resolve a problem before it becomes a chargeback.
By taking small steps to share detailed data on a timely basis, merchants and issuers can address consumer confusion and prevent chargebacks.
Advanced payment solutions that enable better consumer information and ease-of-communication between merchants and issuers are powerful tools to prevent chargebacks.

  • Connect merchants and customers. Most non-fraud disputes are a result of consumer confusion. The Chargeback Triangle report reveals that merchants are more effective than issuers at engaging with cardholders when there are problems with the delivery of a good or service.
  • Better transaction information. Consumers file chargebacks when they don’t recognize or remember a transaction. Merchants need to provide complete billing descriptor information and contact information for each transaction, such as in a digital receipt.
  • Less pressure on issuers. Information-sharing between merchants and issuers eases issuer liability burdens by providing them the information they need to help their cardholders resolve transaction queries in a single communication.
  • End the information void. Data-sharing between merchants and issuers enables both to make more informed decisions about which dispute to respond to and manage.
  • Customer interaction. When filing a dispute, the customer wants resolution without being overwhelmed with information.

At the end of a lengthy chargeback dispute, the merchant and issuer lose valuable brand currency with the consumer due to frustration with the complex and outdated process.
How to Make Chargeback Collaboration A Reality
True collaboration is possible when merchants and issuers use the technologies available to them to change the broken chargeback process. This change in how merchants and issuers work must be a two-way street. It’s up to merchants and issuers to work together to connect the chargeback triangle.
Contact us to learn how Verifi can provide you the tools you need to make collaboration on chargeback management a reality.


For merchants, effective communication is the key to successful, ongoing relations with their client base. Whether it’s staying active with customer emails, clear website product descriptions, visible refund and return policies, or simply sharing purchase information with issuers – good communication is critical.
When it comes to consumer disputes, the numbers tell us what happens without solid communication. We get a broken chargeback process – which in 2017 cost the payments industry $31 billion. These losses can be reduced and even prevented if merchants and issuers collaborate in a well-informed and timely fashion.
For too long, merchants and issuers have been at opposite ends of the chargeback spectrum, resulting in a broken dispute and chargeback system. However, advances in data collection and sharing, instant communication, and remote collaboration technologies present opportunities to improve the process significantly.
The burden placed on merchants is far too great for this cycle to continue without damaging effects to business inception and growth. As it is evidenced in the Verifi-sponsored Javelin study, The Chargeback Triangle, there must be manageable, collaborative solutions implemented to reduce the burden placed on merchants.
In October 2017, Javelin conducted an online survey of 2,000 U.S. consumers, 300 executives influencing chargeback policy at U.S. merchants earning $10 million and greater in revenue, and 200 executives influencing chargeback policy at card-issuing U.S. retail financial institutions. This research informed the foundation of The Chargeback Triangle, providing many illuminating facts on how and why it’s time for merchants and issuers to collaborate to radically change the chargeback process for the better.
The Chargeback Burden
The numbers highlighted throughout The Chargeback Triangle reveal hard truths about the impact chargebacks have on merchants.

  • In 2017, merchants bore nearly two-thirds of the cost of chargebacks.
  • 60% of merchants’ chargeback-related costs arise from chargeback management expenditures, rather than liability.
  • For every dollar in disputed transactions, an additional $1.50 is spent on fees, management expenses – including technology, outsourcing, and personnel.

The Chargeback Triangle research study concludes that the most effective way to prevent chargebacks is with timely communication between merchants, issuers, and consumers.
This communication triangle could enable merchants and issuers to reduce liability and build strong relationships with consumers, by solving disputes before they escalate into chargebacks. Consumers will benefit by resolving their concerns over questioned transactions with little or no friction or frustration – enhancing their confidence in both the merchant and the issuer.
Reducing the Chargeback Burden on Merchants
Progress begins by employing technologies and payment protection solutions that foster seamless collaboration to stimulate the changes that can reduce the burden on merchants.
Results are achieved when every party in the chargeback triangle has access to information, feels supported, knows whom to contact, and has confidence in payments innovations to resolve disputes efficiently. The same technologies that enable instant credit card verification, IP address analysis, m-commerce, in-app purchases, and delivery tracking can be the catalyst for solutions that help deliver a much-improved chargeback process. Such an innovative solution makes it possible for merchants and issuers to share consumer and purchase information so that consumers can self-resolve disputes, interact with a more informed issuer, and communicate directly with the merchant.
To learn more about how Verifi can help you make collaboration a reality within your organization, contact us today.

Chargebacks are a problem for everyone involved in the dispute process – merchants, consumers, and issuers. The trickle-down effects of chargebacks extend well beyond a lost or refunded sale, with disgruntled customers and seemingly endless communication problems, increased operational expenses and reduced profits for merchants and issuers.
In 2017, chargebacks amounted to a $31 billion problem. This number only sits on the surface of larger, pervasive problems that chargebacks cause throughout the entire payments ecosystem.
Apart from out-and-out fraud, no consumer is driven by a desire to file a transaction dispute. The hassle, confusion, and frustration typically outweigh the benefit of receiving a refund on a lost package or invalid order.
Solving the chargeback problem comes down to one fundamental factor – communication. The better the communication between merchants and issuers, merchants and consumers, and issuers and consumers – the easier it is to reduce the number of chargebacks and even prevent their occurrence altogether.
This need for better communication in coordinated effort is reinforced by findings in a new research report, commissioned by Verifi and conducted by Javelin Strategy & Research. This groundbreaking report, The Chargeback Triangle, was informed by an online survey of 2,000 U.S. consumers, 300 executives influencing chargeback policy for U.S. merchants earning $10 million and greater in revenue, and 200 executives influencing chargeback policy at card-issuing U.S. retail financial institutions.
What Is the Chargeback Triangle?
The Javelin report examines the experiences and perspectives of consumers, issuers, and merchants as they relate to chargebacks, illuminating ways to reduce costs and bolster customer satisfaction during a dispute and any subsequent chargeback attempts.
Chargebacks can be mitigated and even prevented through coordinated communication between consumers, merchants, and issuers. By removing confusion and misunderstanding from the process and opening the lines of communication, consumers can self-resolve disputes, or address them directly with merchants; merchants and issuers can share information, and issuers can connect merchants and consumers.
This creates a connected triangle in which each party is invested in improving the consumer experience, reducing loss, and streamlining the dispute resolution process. Greater collaboration between issuers and merchants can help preempt chargebacks and eliminate the burden of a formal dispute process. Success is measured not only by avoiding financial liability for the transaction but also by retaining the consumer’s loyalty with an excellent experience.
The Chargeback Problem
The Chargeback Triangle provides key findings that reinforce the global problem of the chargeback problem.

  • $31 billion chargeback problem. Of the financial losses associated with chargebacks in 2017, $19 billion was borne by merchants, while issuers absorbed the other $12 billion.
  • Issuer loss acceptance. Issuers prefer to accept losses on frivolous chargebacks rather than risk the loss of a customer by refusing a refund.
  • Merchant chargeback-related costs. The chargeback process places the majority of the financial burden on merchants. 60% of merchants’ chargeback-related costs come from chargeback management expenditure, rather than liability.
  • The friendly fraud challenge. Assessing friendly fraud is a significant challenge for issuers. Nearly half of in-app digital goods chargebacks are a result of friendly fraud.
  • Merchant-customer communication success. Merchants that are contacted by the consumer before the initiation of a dispute report better than an 8 in 10 success rate in preventing the issue from becoming a chargeback.

How to Solve the Chargeback Problem
Addressing the challenge requires a coordinated effort among merchants, issuers, and consumers. The remedy is for merchants and issuers to work in collaboration, to reduce liability, protect revenue, and improve consumer loyalty.
The chargeback system in its current state is not going to fix itself. It’s time to open the lines of communication and create collaborative channels. Read The Chargeback Triangle research report for details on the value of collaboration and other key findings from the study to help reduce your chargeback burden.


Strong customer relationships are the backbone of any business. When your customers are happy and satisfied, the more likely they are to come back with return business, share social media and word-of-mouth recommendations, and be more patient with merchant errors.
An important key is to ensure that merchant errors and missteps don’t happen during the first contact with the customer. When this happens, the customer gets a sour taste which can lead to a decline in the merchant-customer relationship, resulting in transaction disputes and chargebacks.
Of course, customers are susceptible to making errors, although generally there is little room for customer forgiveness with merchant errors. This intolerance for mistakes speaks to the need for merchants to focus on establishing outstanding customer relationships at the outset and continuing to make customer service a high priority.
Your Customer Service Team
 Here are some important points that all merchants should adhere to and reinforce with their customer service team:

  • Customer service doesn’t happen once, it’s an ongoing process and relationship, occurring before, during, and after the purchase.
  • Good customer service requires that time and resources be directed to comprehensive and regular employee training.
  • Consistent revenue depends on customer service, which should be part of internal reviews on how to improve an organization’s fiscal health.
  • Customer service can change a customer’s opinion of a merchant—for good or bad.

Now, what does all of this have to do with chargebacks? Stated plainly, good customer service is a merchant’s first line of defense against disputes and chargebacks. The better a merchant communicates with customers to proactively prevent disputes from occurring, the better for everyone involved.
Customer Service Practices for Chargeback Prevention
To make things easier for the customer service team and to prevent customer stress and dissatisfaction, merchants would do well to remember key aspects of friendly fraud and chargeback fraud prevention.

  • Order review: Before finalizing an order, review it carefully to ensure there are no duplicate orders in the system or immediate emails from the customer following the order. Duplicate orders may indicate a problem with payment processing that can result in a future dispute.
  • Clear return/refund policy: Make your e-commerce return/refund policy clear, visible, and accessible on your website and in your email confirmation. This practice can be vital in your preparation for a dispute response.
  • Move quickly: In the case of a refund, act as quickly as possible. Let the customer know the status of the refund and provide clear direction to communicate with someone in customer service if necessary. A slow refund response or no response can compel the customer to file a dispute out of frustration and lack of information.
  • Shipping options and policy: Provide customers a date or estimated date of arrival. This helps to prevent the customer from filing a dispute, should they become frustrated because it took too long for the item to arrive. If possible, provide a tracking number and shipping confirmation email to the customer.
  • Contact the customer: With a proven solution in place, it’s likely that merchants can see when an unexpected or large order has been placed from a customer. When this happens, contact the customer to confirm this purchase. If the order turns out to be invalid, there’s a good chance you’ll prevent a theft and a subsequent dispute.
  • Be flexible with the rules: There are times when it pays to override the refund/return or cancellation policy and give the customer the benefit of the doubt. Just as merchants make mistakes, customers do as well. Review the customer’s order history and use your best judgment when deciding how rigid to be in applying company policies.

These recommendations are just a start for merchants who are focused on making customer service a priority. Each business niche has its own inherent customer service recommendations and best practices. But the underlying principles are clear: communicate, be available, be responsive, and be personable.
Smart Solutions for Proactive Customer Service
Supporting your customer service team and providing them the resources to be proactive with customers requires access to key customer information. Using a solution such as Verifi’s Order Insight can bridge the knowledge gap, making it possible to develop strong customer relationships that you can rely on year-over-year.