Chargeback Companies: How to Choose the Right Provider

This guide will help you understand chargeback companies. We'll look at what they are and what to think about when choosing one. Read on to find your next chargeback solution.

Author

Theodore Sterling

Key Takeaways

Chargeback companies offer ways to reduce and manage disputes.
Use them when you want to lower chargeback rates without hiring special staff.
Think about your needs before choosing a tool.
Many payment systems already have fraud protection built-in.

What Is a Chargeback Company?

A chargeback company helps businesses handle payment disputes and reversals. They know a lot about the chargeback process. They might help solve disputes, spot fraud, and fight chargebacks. Some do everything for you, while others just give advice.

Most solutions offer complete packages for big companies. These often cost more.

But there are cheaper tools too.

They may rely on automated systems with no human touch. These can still help prevent or win disputes.

You might be better off using separate tools for different jobs.

If you just need alerts, look at options like Chargeback.

Need fraud prevention?

Need to stop fraud? Think about built-in tools (like Stripe Radar) or companies like SEON.

You might not even need help from a chargeback company.

That's why the next part might save you money.

Summary: They offer services that prevent or manage chargebacks.

When Should I Use One?

Most card networks give you access to the tools you need.

For example, you could sign up with Verifi (a Visa company) and get tools like:

Order Insight
Rapid Dispute Resolution
CDRN

Order Insight and RDR only work for Visa transactions, though.

For Mastercard, you'd need to use Ethoca's services too.

These often need technical know-how and an in-house chargeback team.

Let’s say you’re up to the task.

Here’s what else you’d need to do:

Answer every chargeback (very quickly)
Keep up with rule changes
Change how you work when rules change
Figure out where your chargebacks come from
Know all about industry rules

The list goes on…

A chargeback expert could help with all of this. But that means hiring special staff.

Chargeback companies make life easier by offering all tools in one place. They also give you data to understand what's happening.

You're trading money for time (and convenience).

If you're a smaller seller with fewer chargebacks, you might handle them yourself without much trouble.

Start with “free” ways to prevent chargebacks. These involve being more transparent and reducing weak points.

Then, try free tools like Order Insight and Consumer Clarity. These let you give customers more info about their orders.

This might stop chargebacks.

When your chargeback rates get worse (over 0.50%), start using chargeback companies.

As rates go up, add more tools to your plan.

For example, when you're close to a 1% chargeback rate, start using CDRN, RDR, and Ethoca alerts. These cost a lot.

But it’s less money than what you’d pay being in, for instance, the Visa Dispute Monitoring Program.

Let’s move onto factors to consider when picking a company.

Summary: Use them for easy access to chargeback tools. Don't use many tools unless your chargeback rate is high.

What to Consider When Choosing a Chargeback Company

I’ll cover these factors:

Features
Your needs
What to look out for
Cost
Data source
Integration

I’ll provide as much insight as I can for these sections.

Let’s begin with features.

1. Features

When picking a chargeback solution, think about what features matter most.

Each feature should help you reach your goals:

1. Real-Time Transaction Monitoring.

Best for: Online stores and businesses with lots of sales.

This watches transactions for odd patterns. It might spot big purchases from new accounts late at night.

This helps stop fraud before it becomes a chargeback.

2. Chargeback Notifications.

Best for: Businesses that face chargeback risks often, like digital products or travel services

This tells you when a chargeback might happen. It lets you act before a dispute starts.

3. Automated Evidence Submission.

Best for: Businesses that deal with many disputes

This gathers and sends proof for disputes automatically. It helps you meet dispute deadlines.

4. Customer Profiling and Blacklisting.

Best for: Subscription-based services and online retailers.

This helps find risky customers and stops future fraud. It flags users based on their history.

7. Reporting and Analytics.

Best for: Businesses that need to understand their chargeback performance

This gives detailed reports on disputes and chargeback trends. It helps you see patterns and where to improve.

8. Workflow Automation.

Best for: Businesses dealing with lots of chargebacks.

This handles the whole dispute process from start to finish.

It cuts down on manual work and makes things more efficient.

Think about what your business needs to decide which features matter most.

What are your needs?

2. Your Needs

Most companies let you pick which tasks they'll handle for you.

Choose only what you can't do in-house.

Want the provider to do everything?

Prepare to pay more (money) and save more (time).

Outsourcing to a chargeback management solution might save you money since you won’t need to pay for training, benefits, and other expenses, though.

If you sell worldwide, the provider should help with threats from different regions.

Here’s an example:

If you sell in the EU, the company should be up-to-date with EU regulations. That way, you avoid making mistakes that could lead to penalties.

They should be able to manage transactions in various currencies.

Moreover:

Do you need to stop chargebacks, fight fraud, or representment, or all 3?

Prevention would usually come from alerts and consultation. This works for low-cost or digital items.

Fraud protection comes from fraud prevention tools (of course). This helps sellers dealing with a lot of fraud.

Many payment gateways come with built-in fraud tools. Most of the time, those are good enough.

Special fraud tools are for sellers who face a lot of fraud.

And representment means gathering proof and sending it on time.

This work better for e-commerce sellers with high average transaction values.

You should watch out for these red flags when vetting solutions providers.

Summary: Consider companies and packages based on features you need and international support.

3. What to Look Out For

Here’s what to look out for when evaluating chargeback management companies:

1. Lack of Transparency.

A provider that won’t share success rates or case studies is suspicious.

If they can’t show their past performance, it's hard to know if they're any good.

Transparency helps you gauge whether they align with your business needs.

2. Poor Customer Support.

Unresponsive or unhelpful customer support can leave you stranded during critical moments.

Disputes are time-sensitive. If your provider isn’t available when needed, you risk losing.

3. Overpromising Results.

No one can stop all chargebacks. Don't trust companies that say they can.

4. Long-Term Contracts with No Flexibility.

Providers that push for long contracts can lock you into an underperforming service.

Flexibility is important. Allowing you to adapt or switch if the service doesn’t meet your expectations or your business needs change.

5. Minimal Security Measures.

A provider with weak data protection puts your sensitive business and customer information at risk.

Breaches can lead to legal liabilities, loss of customer trust, and damage to your reputation.

Ask what they do to protect data and check if they, or their parent company, had breaches.

8. Inflated win rates.

Some providers will only count win rates for cases they fought and not every dispute you received.

They may also not report information regarding second chargebacks (AKA pre-arb disputes or second representments).

Review contracts thoroughly and clarify every pricing detail to avoid surprises.

9. Hidden Fees.

Some companies may advertise low prices but add extra costs later. These fees can inflate your total costs, eating into your bottom line.

Let’s look at some potential fees.

4. Cost

Here are the typical pricing schemes you’ll encounter with chargeback companies:

Per-user
Monthly
Paid-on-performance (e.g., percentage of chargeback won)
Each action (e.g., cost per alert)
Per order (e.g., cost per order scanned)
Volume-based fees: Increase or decrease based on the number of chargebacks
Percentage of a transaction
For each case they fight

Aside from the above, you may also need to pay the following costs:

Read everything carefully. Know all costs before picking a service.

Many companies want you to talk to them for a price. Ask for a list of every fee during this conversation.

Also, find out if you have to sign a contract.

This helps you decide if the tool is worth it.

A lot of solutions (e.g., Kount) only have enterprise pricing.

For instance, a buddy of mine quoted Chargebacks911 for basic access to their services. They told him it was $1,000 monthly.

That's too much for small businesses.

Let’s see how to interpret marketing language.

5. Claims

Many things affect how well a tool stops chargebacks. For instance, one of our case studies says that alerts could prevent up to 91% of disputes.

This is true, but not everyone will see such good results.

For instance, alerts work better for digital products. They also don't work everywhere.

CDRN alerts only work for customers in the US.

RDR alerts only handle some Visa issues.

Ethoca Alerts mainly focus on Mastercard problems.

None cover all card types (like JCB) fully. Also, not all banks use these alerts.

I can’t speak for every other service provider.

Some might say, "We win 80% of chargeback cases."

That may be true for one case study, but won’t apply to all disputes.

Don’t choose a company based on marketing copy. Consider every other factor on this list before deciding.

Speaking of claims.

6. Do They Handle Businesses in Your Industry?

Some providers may not fight certain chargeback reason codes. For instance, they might not fight a code related to recurring transactions because they could be harder to fight.

If you sell digital products, make sure the company will help you.

They might not because these chargebacks are harder to win. If they don't fight for those types of products, what other scenarios would they abandon you in?

If you go with a solution that offers representment, check if the company will help you get money back for all reason codes.

Otherwise, what’s the point?

This next point will also help you gauge their resources.

Summary: If a company won’t fight all reason codes, it shows they won’t do all they can to help sellers.

7. Data Source

The data source matters when picking a chargeback company. It affects how good their alerts are.

Here's why it's important and what businesses should look out for:

Alert accuracy: Good data means better alerts.
- This lets sellers act fast on possible chargebacks.
Cost issues: Some providers use bad or old data.
- This can make alerts cost more for the seller.
Quick info: A good data source gives timely info.
- Sellers often get info too late due to slow sharing.
Full coverage: Look for companies with wide data access.
- This helps them find why chargebacks happen.
Direct versus indirect: Direct data is better.
- Ask if the company uses direct or less reliable sources.
False alerts: Good data means fewer false positives.
- Some tools have up to 50% false positives.
All chargeback types: A good source should cover all chargebacks, not just some types.

When looking for a chargeback company, businesses should ask potential providers:

Their data sources
How they ensure data accuracy and timeliness
Their false positive rates
How their data integrates with existing systems

Also ask about the provider's ability to investigate chargeback sources thoroughly and their coverage of different types of chargebacks.

8. Integration

Check if the provider works with your:

Customer relations management tool (CRM)
Payment processor
Payment gateway

You don’t want these companies to have access to information like lead lists. But you do want them to be able to communicate with your payment processors/gateways.

Otherwise.

How will they manage chargebacks?

Now that we know the factors, I’ll provide a list of companies to help you start your search.

What Are the Best Companies?

Here's a quick list of top chargeback companies for different needs:

In short, here are some of your options:

Chargeback: Best for alerts
Signifyd: Best all-in-one tool
Chargebacks911: Best post-chargeback tool for enterprise
Chargeflow: Best for smaller e-commerce stores

If you’re searching for Stripe apps, we have a separate guide for such tools.

Shopify users looking to stop fraud will like this piece.

These are for fraud-related chargebacks. But Shopify users can combine one or more of those apps with other chargeback solutions for maximum rate reduction.

Without further ado, let’s jump into the trenches.

1. Chargeback: Best Alert Provider

Services:
- Alerts
Best for: Best for: SaaS & media products (low shipping cost items)

Pros:

Quick setup
Proven results
Works with all major payment processors

Cons:

Doesn't work with as many other tools

Chargeback works best for digital or SaaS sellers who need chargeback alerts. Alerts can cut chargebacks by up to 91%.

Sellers with low profits or friendly fraud should avoid alerts. They might cost too much.

2. Signifyd: Best All-in-One Solution

Services:
- Alerts
- Management
- Dispute response generator
- Fraud prevention
- Account protection
Best for: Big businesses needing all-in-one solutions

Pros:

Automated chargeback representment
Money-back promise against fraud and non-fraud chargebacks
Flexible pricing for different business sizes

‍

Cons:

Unclear pricing for bigger businesses

Signifyd works best for sellers who require fraud prevention.

It helps businesses shift fraud liability and reduce chargebacks through fraud prevention. It provides instant decisions with financial guarantees for approved orders.

Smaller sellers pay a percentage, while larger companies get custom pricing options.

3. Chargebacks911: Best Post-Chargeback Solution for Enterprises

Services:
- Alerts
- Management
- Compliance check
- Dispute source finder
- Representment help
Best for: Big businesses needing full solutions

Pros:

Full chargeback management system
Detailed reporting and data analysis
Proactive alerts and notifications

Cons:

Prices not shown up front
Focuses on after-chargeback actions, less on prevention

Chargebacks911 is great for big businesses needing full chargeback handling.

It focuses on solving disputes, giving deep insights and strong chargeback defenses. Pricing is custom, but other tools may be better for stopping fraud or giving alerts.