972.415.3450 or 512.694.9146 Sally@PaymentOperationsGroup.com

Payment Operations Group thanks you for indulging us in this preparation for an unpopular time of year – Chargeback Season. Our last conversation is here even though the season is only just beginning. Now that we’ve brought a few items to the forefront of your mind, we all need to focus on the end of month dispute statistics that are about to roll in. And perhaps you’ve reviewed your December end of month chargeback calculations as well and noticed that your percentages were low while your counts of actual chargebacks went up. That is a feature of the higher sales season – now over – and its impact on chargeback ratios overall.

As your Chargeback Season ramps up, we would like to call out a few final thoughts.

First up, avoidance is not a strategy. Every payment scheme publishes their excessive/fraud dispute program calculations and limits. Every merchant can and should use that information to calculate their own chargeback ratios for each payment type. If your merchant account is near or over a threshold for fraud or excessive dispute ratios per any payment scheme’s program, take action. Just because your processing partner may not have sent you a dispute program notification (or at least not yet), doesn’t mean no one noticed. Sometimes early warning letters are not sent to merchants. Sometimes they will be sent soon – but too late to make significant changes before Month 2 in a program. No matter what, you should own your own ratios and know well before end of month reporting and potential notifications that you may be having a bad season. Take Action – full stop.

Also feel free to reach out and let your processing partner know that you are aware even if you didn’t get a formal notification. Tell them this is important to your brand. Give them a heads up that you are an active partner in your own chargeback reduction program. Let them know you want to hear from the Card Schemes and are ready to improve.

If your processing partner did send you a Month 1 notice, and you read it and it says ‘no fines’, and a bunch of softer language designed to encourage engagement, did you just exhale and hope? Next month will be worse because February has a smaller sales window with larger chargeback exposure. Okay, not all Schemes use current month’s sales to calculate ratios but either way, that’s a calendar issue you’ll find hard to avoid if you just brush off that Month 1 warning because you ’have plenty of time’.

Note the fines after Month 4 are not prohibitive – they are large enough to make sure you are paying attention but not so big as to cause panic. Your processing partner may now ask that you complete a response form to discuss what you are doing to fix the problem. Please remember that “N/A” is not a valid remediation plan!

Exiting a chargeback program is not a temporary project – It is a frame of mind which guides merchants into a tighter processing position. Emergency projects that are installed for the short term or with a one-time use profile don’t really address why chargeback seasons hit hard. They definitely are not useful for proactive chargeback prevention in years to come.

Best practices for Chargeback Prevention can include a few of the items we’ve discussed these last few weeks:

  • Clarify and expand your open and honest communication with your consumers,
  • Verify new accounts, their emails, their ability to access/use your products, and their intent,
  • Update multiple processes and FAQs for seasonal needs – not just the sales season, but the chargeback season as well,
  • Ensure all available tools are in place to properly describe your sales including, at least, accurate and thorough (even dynamic) descriptors and logo displays,
  • Review and Update your tools, rules, deals, and coupons for each year to address dispute trends,
  • Work toward Active and Protected Account statistics to measure your brand’s health,
  • Convert short-term changes into long-term improvements and eventually into proactive preventative measures,
  • And address the Scheme Dispute Programs as a serious opportunity to improve, not a punishment to be avoided.

And if we could add one final suggestion, it would be to add a protective component to every single marketing program, payment project, and seasonal sales plan. No matter the project, devote just a small percentage of that project to methods of improving chargeback prevention. Wouldn’t it be great to enter Chargeback Season with a sense of preparedness that rivals the Holiday Sales Season’s optimistic sentiment?

We will let you go now. Thanks for reading these articles and we sincerely hope something here helps you during this delicate time of year. If we can wish you nothing else, we would hope for all of you a Boring and Uneventful Chargeback Season this year!

Payment Operations Group is a consultancy of Payment Professionals who ran away from home to join the circus. But seriously, if you would like to pursue a Strategy for your processing future or any payment engagement at all, contact information is provided below.

Payment Operations Group, LLC

Payments…Navigating, Educating, Strengthening.

Christine Wade



Sally Baptiste