Unpacking Chargeback Alerts: Challenges and Future Directions in Merchant Protection

Chargeback Alerts: The Unresolved Mystery in the Payments Industry and the Future of Merchant Protection

In the payments industry, chargebacks have always been a major challenge for both merchants and payment processors. Especially in recent years, some large payment platforms have started using chargeback alerts provided by Ethoca and Verifi. While these alerts were intended to protect merchants, the situation has become more complex. Chargeback alerts should act as a safety net, helping merchants identify and resolve potential issues before chargebacks occur, but now it seems this system has been "hijacked" by certain large platforms, leaving merchants vulnerable.

The Real Issue: How Big Platforms "Weaponize" Chargeback Alerts

Traditionally, Ethoca and Verifi offer chargeback alerts to help merchants identify and resolve potential chargebacks before they happen, thus reducing the risk of chargebacks. Merchants could take actions such as contacting customers or fixing issues to prevent the payment platform from freezing funds or imposing penalties.

However, lately, some payment platforms have begun purchasing these chargeback alerts and using them to take preemptive actions. The problem is that these platforms treat these alerts as if the chargeback has already occurred, taking drastic measures such as:

• Increasing merchant reserves,

• Delaying payout processing,

• Flagging merchants as high risk, and

• Even shutting down merchant accounts in some cases.

This approach creates the following problems:

• Merchants lose control over chargeback alerts and miss the opportunity to take proactive steps before a chargeback happens.

• Platforms treat alerts as "pre-chargebacks," without giving merchants enough time to resolve the issue.

• Merchants may be unfairly labeled as high-risk and face consequences like frozen funds, account closures, and other extreme measures.

The Solution: Tailored Chargeback Alerts That Don’t Create These Problems

Unlike the approach taken by others, the chargeback alerts we provide through Ethoca and Verifi are focused on the actual needs of merchants. Our solutions aim to truly protect merchants, rather than punish them. Through our tailored solutions, merchants can gain real protection and reduce chargeback rates.

Why Our Solution Doesn’t Lead to These Issues

1. Merchant-First, Data Control: Our service is completely merchant-centric, meaning that chargeback alert data always remains in the hands of the merchants. They are notified immediately and can take action to address any potential issues. Unlike the approach taken by payment platforms, we don’t treat these alerts as actual chargebacks; we don’t impose punitive measures on merchants before they have a chance to fix the problem.

2. Customized Risk Management: Every merchant has different business models and risk tolerance, which is why we offer customized chargeback alert solutions. Merchants can choose risk management strategies based on their own circumstances, maximizing the reduction of chargeback rates and adjusting strategies as needed.

3. Lower Chargeback Processing Costs: Handling chargebacks is a heavy burden for merchants, not only consuming time and resources but also incurring significant costs. By offering early alerts, we help merchants identify chargeback risks sooner, preventing chargebacks from happening in the first place. This means merchants don’t have to spend valuable resources handling chargebacks after the fact, thus reducing the overall chargeback processing costs.

4. Maintaining Payment Gateway Stability: Our partnership with Ethoca and Verifi ensures the stability of merchants’ payment channels. By identifying and addressing issues early, merchants can avoid the risk of funds being frozen or accounts being flagged, ensuring the long-term stability of their payment systems.

Flexible Solutions to Help Merchants Tackle Future Challenges

We understand that the payments industry is rapidly evolving, with new challenges and risks emerging constantly. Our chargeback alert services are not static solutions, but dynamic systems that continue to evolve. We provide merchants with tailored solutions that can be adjusted as needed, ensuring that they stay competitive and protected against evolving risks.

Unlike some large platforms that offer a “one-size-fits-all” model, our solution is more adaptable and flexible. Merchants can choose the most appropriate risk management tools for their business at different stages, ensuring they can reduce chargeback risks while maintaining operational flexibility.

Conclusion: Choose Merchant-Centric Chargeback Alert Solutions

Ultimately, merchants’ interests and security should always come first—not be used as collateral damage in a payment platform’s risk management strategy. With the tailored chargeback alert services provided by Ethoca and Verifi, we help merchants truly take control of their risk management, reduce chargeback rates, lower chargeback processing costs, and ensure the long-term stability of their payment systems.

In the ongoing race for the future of the payments industry, our solution offers merchants stronger protection, greater flexibility, and fewer risks. This is undoubtedly a better alternative to the "weaponized" approach of some large platforms.

Choose us for a truly merchant-focused chargeback alert service, and experience safer, more stable, and efficient payment operations.