Transaction Trends

By Domenic Cirone, SVP, Acquirer Solutions, Midigator

Chargeback monitoring is critical to not only mitigate critical immediate losses and significant long-term losses, but also to prevent fees and fines from the card brands and other governing agencies.

In the fourth edition to the ETA Guidelines on Merchant and ISO Underwriting and Risk Monitoring section 4.11.1 addresses the need for a chargeback monitoring team to be separate from the transaction monitoring team, especially if your portfolio is greater than 5,000 chargebacks per month. A chargebacks monitoring analyst should be well versed in not only chargebacks/dispute regulations and the requirements to respond to each case type and reason code, but also understand the fundamental reason for each dispute. This is needed to better explain chargebacks to your merchant; assist them on how to respond to disputes; better communicate the exact risk exposure, and address other potential issues at the merchant level that can lead to significant losses at your company.

The primary reason that the chargebacks risk function should be separate from the transactional risk function is analyzing cases both on a merchant and case detail level, plus overall report analysis at a portfolio level, is a fulltime job that requires focused attention. That said, while the departments need to remain separate, constant cross-training between departments is a must as the functions are interdependent on each other. A common misconception/misunderstanding is when a transactional risk analyst states that they do not understand chargebacks or how to respond to them, when many (not all of course) of their responsibilities are founded based on chargeback/dispute regulations.

It is also important that the chargebacks monitoring analysts understand how the overall risk process work from funds management to excessive fraud/chargebacks threshold programs and all other risk programs mandated at the card brands. It is key that they understand the need to work with your risk team when they notice a pattern in a merchant’s behavior when reviewing reason codes, transaction dates, etc., but also reviewing case details and merchant responses.

To learn more about the updates to ETA Guidelines on Merchant and ISO Underwriting and Risk Monitoring the ETA hosting a webinar on September 15 at 2PM ET. The session will focus on best practices and deliver recommended tools for risk monitoring. Attendees will have the opportunity to ask their own questions during the event. Click here to register for the webinar.

ETA members, click here to download the guidelines for free.