Prevention alerts are a valuable risk management tool. They can help you refund disputed transactions to avoid chargebacks.
But how do you know if prevention alerts are a good fit for your business?
Let’s take a look at both the pros and cons of this chargeback management strategy.
Want a high-level overview of how prevention alerts work? Check this article first.
PROS
What are the benefits of using prevention alerts?
There are a variety of chargeback prevention products on the market today — Ethoca prevention alerts, Verifi CDRN, RDR, and Order Insight to name a few. And all of these solutions share several very valuable benefits.
- Lower chargeback rates. For a lot of businesses, it is absolutely essential to keep chargeback activity to a minimum. So prevention solutions become vitally important. Resolving disputes before they turn into chargebacks can help you avoid a monitoring program — or get out of one if you are already enrolled.
- Reduce fees. Payment processing fees are often determined by your business’s reputation. If you do a good job of managing risk, you could pay less in fees and penalties. Plus, you might be able to reduce or eliminate your merchant account reserve.
- Solve problems quicker. Usually, about 2-5 weeks will pass before you find out a chargeback has happened. But prevention solutions operate in near real time. This means you can identify and solve underlying issues much quicker so you can eliminate the risk of additional chargebacks.
- Save the cost of goods. Because alert notices are issued in near real time, you might be able to stop order fulfillment before your merchandise is shipped out to fraudsters.
- Get more merchant accounts. If you are hoping to grow your business and obtain additional merchant accounts, it’s important to protect the accounts you already have. And chargeback prevention solutions will help. Prove you can effectively manage risk and you’ll improve your business’s reputation, increasing the odds that your application will be approved.
- Expand to new markets. Each new country you sell in will have its own unique threats. If you use chargeback prevention solutions, you’ll have a universal layer of protection as you navigate the new unknown.
- Try new sales methods. Adding new sales methods can improve conversion rates and increase sales. But new sales methods usually come with unexpected risks. If you aren’t prepared, your attempts to increase revenue could totally destroy your revenue. Prevention solutions can preemptively address risks before you are even aware of them.
- Set it and forget it. Prevention solutions can be fully automated, meaning you don’t have to be involved in the dispute resolution process. Just let the technology work on your behalf.
Those are some pretty valuable perks for your business!
But what about prevention alerts specifically? What benefits do alerts have that other strategies lack?
- Review each case if you want. Prevention alerts can be automated. But there is also the option to manually review each case. Maybe you don’t want to blindly refund every dispute that comes in (which can happen with solutions like RDR). If chargeback thresholds aren’t a major concern for your business, you might prefer to focus on optimizing revenue. And you can do that by letting an alert advance so you can challenge the chargeback and protect your revenue.
- Trust a dependable product. Prevention alerts were the first-ever chargeback management tool. They’ve been around for more than a decade and have a proven track record of success. Newer products — like RDR, Order Insight, CE 3.0, etc. — still have a few bugs to work out.
- Enjoy more complete protection. Prevention alerts can help manage both Mastercard and Visa chargebacks. All other prevention solutions are card brand specific.
- Get your money back. Prevention alerts have a money back guarantee. If you issue a refund and respond to the alert within the given time frame yet the dispute still advances to a chargeback, you are entitled to a credit.
CONS
What are the drawbacks of using prevention alerts?
While there are several very valuable benefits of using prevention alerts, there are a couple shortcomings you should be aware of.
- Tight timelines. If you don’t fully automate the prevention alert process, you’ll have to manually manage each alert. And both Ethoca and Verifi have very short timelines — a matter of hours. If you don’t issue a refund and respond before the deadline, the alert will become a chargeback. To improve outcomes and ROI, consider working with a solution provider — like AltoPay® — that is able to navigate time restrictions.
- Overlap. If you receive prevention alerts from both Ethoca and Verifi, there is a chance for overlap — a single dispute triggering an alert from both vendors. If you work with a reputable service provider, there are ways to minimize the impact of overlap. Reach out to AltoPay if you’d like to learn more.
- Results. While they are able to successfully resolve a significant portion of disputes, prevention alerts can’t completely eliminate the risk of chargebacks.
- Cost. Like nearly everything in life, prevention alerts do come with a fee. But the good news is, alert fees are usually comparable to all other prevention solutions.
TL;DR
In summary…
Bottom line — do the pros outweigh the cons?
Let’s take a look.
PROS
CONS
- Reduce your chargeback rate
- Lower costs
- Identify hidden issues
- Prevent fraudsters from stealing your products
- Get more merchant accounts
- Safely enter new markets
- Experiment with new sales methods
- Choose your level of automation
- Avoid management mishaps
- Prevent Mastercard and Visa chargebacks
- See results — guaranteed
- Deal with tight timelines
- Risk overlap
- Face reality — nothing is perfect
- Pay a fee
PROS
- Reduce your chargeback rate
- Lower costs
- Identify hidden issues
- Prevent fraudsters from stealing your products
- Get more merchant accounts
- Safely enter new markets
- Experiment with new sales methods
- Choose your level of automation
- Avoid management mishaps
- Prevent Mastercard and Visa chargebacks
- See results — guaranteed
CONS
- Deal with tight timelines
- Risk overlap
- Face reality — nothing is perfect
- Pay a fee
Still not sure if prevention alerts are a good fit for your business? Reach out to AltoPay. Our team of experts can talk through potential chargeback prevention strategies and help you determine which is best for your business.
For more than a decade, Jessica Velasco has been a thought leader in the payments industry. She aims to provide readers with valuable, easy-to-understand resources.
