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Chargeback Representment: Who’s Winning and Who’s Losing?

posted on: Wed Feb 28 2018

Online merchants say that “disputing chargebacks” is their number one chargeback challenge. That’s according to “The State of Chargebacks: 2018 Report", published by Kount and sponsored by Chargebacks911.

So, who’s winning and who’s losing when it comes to disputing chargebacks?

To start with, 11% of merchants do NOT dispute chargebacks at all, so we know that they are definitely not winning. What reasons are given by this 11% for failing to dispute?

  • 28% not enough chargebacks to justify representment
  • 26% not enough resources
  • 16% I don’t know
  • 15% other
  • 15% we never win our chargeback representments

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What about the 82% of merchants who ARE disputing chargebacks? Many factors influence the decision to represent, including order value, chargeback reason code, and what relevant dispute information a merchant has. Here is how representments break down for the approximately 8 in 10 merchants who are disputing chargebacks:

  • 39% dispute more than 60% percent of chargebacks
  • 26% dispute 1-15% of chargebacks
  • 16% dispute 15-30% of chargebacks
  • 11% dispute 30-45% of chargebacks
  • 8% disputes 45-60%

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The high number of merchants disputing more than 60% of chargebacks may indicate a “shotgun” approach, where organizations represent almost every chargeback. Or it could be an indication of the types of chargebacks they handle. For example, merchants encountering a large number of friendly fraud chargebacks and billing disputes will likely have much higher dispute rates than merchants primarily receiving chargebacks related to card-not-present (CNP) fraud.

What kind of win rates are merchants are experiencing? Somewhat surprisingly, the number one response is: “I don’t know.” Otherwise, the win percentage rates are fairly evenly distributed:

  • 24% I don’t know
  • 19% win 1-15% of disputes
  • 18% win more than 60% of disputes
  • 16% win 15-30% of disputes
  • 14% win 45-60%

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In other words, about 1 in 3 merchants are doing well, winning 45% or more of representments, and about 1 in 5 are doing not so well, winning 15% or fewer of chargeback disputes.

As one might suspect, larger merchants with annual revenues of $250 million or higher do better with their win rates than smaller merchants with annual revenues of $10 million or less. Only 9% of larger merchants report win rates of 15% or less. On the other hand, nearly three times as many smaller merchants (25%) report this low win rate.

The market segment in which an online business operates affects win rates, too. Health and beauty merchants are more likely to enjoy win rates higher than 60%. So are online businesses selling home, kitchen, pets, and toy products. At the other end of the scale, more than 1 in 5 eCommerce merchants in the apparel, accessories and jewelry and food and beverage segments cite win rates below 15%.

How does your business compare to competitors and colleagues? To see comprehensive breakout numbers and percentages by market segment and revenue, download the “The State of Chargebacks: 2018 Report". You’ll get access to more than 50 pages of insightful analysis and commentary, backed by 30+ powerful charts, tables and graphs.

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