How do you preserve low and stable Chargeback rates over time?

It was late in the evening when the phone rang. On the screen I saw the face of David, CEO of MangoFX; I was curious. A phone call at this hour usually means a critical issue to solve… As you know, 3 months ago, the one-year- old company had received a letter from their primary acquirer, notifying them of a breach in the Chargebacks compliance program, and additionally a warning of termination.

We worked hard and intensively in the last 3 months in order to implement short term steps to lower the high chargeback rates, and we succeeded! David apologized for the late hour, and although he managed to sit at his office desk after a long day of meetings, he still sounded as if his mood was good. For the first time in weeks, he felt back in control as the chargeback rates had dropped, the acquirers were happy and content, and so, - what more could he ask? I thought… true, we did a great job, but the true challenge is to keep these rates stable over time, as the number of deposits increase every day!

So, what did we do for the long term? Or, in other words, how to retain our success?

Compliance Process - the FOREX BO regulation requires a set of verification documents from the customer: (ID verification, Utility Bill, Credit Card photocopy and in some cases Bank Statement). This process creates resistance among both the sale representatives and the customers. However, this process is actually a gift:  Verifying the customer's identity is a basic practice for any internet merchant. If it is a case of identity theft, the customer will not be willing to expose any data and will move to another unsecure site.  Once a customer sends documents, there is a psychological effect; this customer will think twice before presenting a chargeback at his issuing bank.  Organized processes also affect the sales teams. They will also think twice before giving the customer any precise information - accurate information prevents chargebacks.  Last but not least, these verification documents serve us when we execute an appeal on a chargeback case. In time, MangoFX succeeded in growing a team that specializes in representation of chargebacks, as well as saving of a lot of money for the company.

Fraud Detection System - 10% to 20% of the chargebacks in this industry are caused by Fraud - the credit cards details were stolen! There are many methods to locate internet fraud today. Usually the best way is a combination of internal and external tools. Internal tools are a set of queries that highlight suspicious transactions: a “black list” to suspend accounts, or a set of deposit limits by customer’s status. External tools are on-the- shelf tools that analyze important info on the customer, such as: his IP address, the device he is using or customer scoring based on his online profile.

Communication Transparency - We are all customers and we also buy online. When we understand what we bought, how much we paid, and we received in return, our satisfaction increases. Of course, once we understand who to address should there be problems with the product, we feel safe. The same applies for online trading. We will create a good customer experience by sending an email confirmation with full deposit details, documentation of the calls, and by presenting a clear balance in “My Account”. This will surely create a secure feeling, therefore decreasing the risk of chargebacks.

Call Filtering / Screening - In MangoFx, the management trusts the employees and although all of the calls are recorded, no one listens to them. You’d be surprised how much damage control can be done once a risk management analyst performs quality control for the sale & retention calls. The tone of the conversation can clearly indicate whether the customer is happy or not. You do not have to listen to all calls as this would certainly require heavy allocation of resources. The transactions need to be filtered by Country and Affiliate, with a senior Representative listening to the problematic ones. After listening, the risk analyst marks the transactions; the “red” ones need to be refunded, the “green” ones approved and the “yellow” ones need a second call to enhance customer retention.

Management Dashboard - Last but not least, it is very important that the company management speaks the same “business language” and employs the same monitoring tools. You need to agree on 2-3 charts that will measure the volumes vs. chargebacks, and ensure that these charts are emailed on a daily basis to all managers. It is recommended to drink the morning coffee in parallel to reading these reports. When there are no surprises and each exception is handled on time, everyone can sleep well at night.

3 months later… The chargeback rates dropped to 2.1% and stayed stable. The Volumes increased once the number of chargebacks stopped rising.

As a result of the good status of MangoFX; high volume with minimal fraud - new acquirers approached David, the CEO, with attractive processing fees and upgraded levels of service. The costs of processing and risk management dropped due to all the good work we have done.

* Our customer's data confidentiality is important to us, therefore, the names in this article have been changed.