Chargeback prevention alerts are a warning to a merchant that a chargeback will soon be filed. The two primary alerts providers are Verifi (for Visa transactions) and Ethoca (for Mastercard transactions).
It is possible to subscribe to the chargeback prevention alert networks on your own. But keeping those alerts organized and properly responding to them can be cumbersome. There are also sometimes issues in which banks notify both Ethoca and Verifi about a single chargeback, resulting in duplicate alerts and fees. A good third-party alerts provider makes it easier to organize and manage alerts as well as providing solutions to problems such as duplicate alerts. Additionally, third-party alerts can be packaged together with other chargeback management tools in a single platform.
Chargeback prevention strategies are complex and vary according to the particulars of each business. But any effective chargeback prevention strategy requires some sort of advance warning such as chargeback prevention alerts. If you don’t know that credit card chargebacks are incoming, it is very difficult to prevent them.
Chargebacks are expensive. Ethoca estimates that, on average, each chargeback costs merchants 2.5 times the original transaction amount. This statistic generally measures the direct costs of chargebacks, which come from lost revenue, chargeback fees (between $20-per-chargeback and $100-per-chargeback), and operational costs. There are also indirect costs relating to
brand damage. And there are more severe consequences associated with excessive chargebacks.
