Scaling Beyond Static: The Future of Chargeback Management

Scaling Beyond Static: The Future of Chargeback Management

Managing chargebacks efficiently can make or break a business. A recent conversation I had with a large US merchant in the subscription industry highlighted the challenges posed by growing transaction volumes and seasonal spikes, emphasizing the urgent need for scalable solutions. During our discussion, a key point of emphasis was their struggle with hard-to-predict chargeback surges. These spikes, often occurring due to factors like seasonal sales, promotions, or fraud attempts, underscored the critical importance of scalable solutions.

This prospect had to choose between risking a backlog of unresolved chargebacks, which eventually turns into a loss because there is a set amount of days to respond to chargebacks, or compromising on the quality of their responses. Both scenarios led to substantial revenue losses.?

In conversations with various companies and teams, it's common to see them weigh their options carefully when it comes to managing chargebacks. Typically, I find them considering one of three approaches. First, some may contemplate building an internal tool, allocating valuable resources to a project that may lack full understanding from the product team tasked with its development. Alternatively, they might opt to hire additional staff to handle demand spikes. However, this approach raises questions about what to do when the spikes inevitably decrease, leaving the company with excess resources. Finally, others are exploring the option of leveraging a specialized tool like justt . Each option comes with its own set of considerations and trade-offs, making the decision a crucial one for businesses aiming to streamline their chargeback management processes.

Overcoming Limitations in Building an Internal Chargeback Management Solution

1. Inadequate Capacity:

Creating an internal chargeback management tool may seem appealing, but it comes with inherent limitations. Internal teams and resources, no matter how dedicated, are often constrained by their size. As chargeback volumes surge, these teams may struggle to keep up, leading to delays in response times and a decrease in overall efficiency. Additionally, unless they are domain experts in chargeback management, building a tool from scratch may result in a solution that lacks the necessary sophistication to address the complexities of the process effectively.

1. High Costs:

Building and maintaining an in-house tool requires significant investment in terms of both time and resources. From hiring specialized talent to ongoing development and maintenance costs, the financial burden can quickly escalate. Moreover, the return on investment may not justify the expenses incurred, especially as transaction volumes fluctuate.

1. Operational Challenges:

Managing an in-house chargeback solution can place a strain on internal resources and workflows. Daily operations may be disrupted as teams grapple with troubleshooting issues, implementing updates, and ensuring data accuracy. This operational strain can hinder productivity and divert focus away from core business activities, impacting overall performance.

Why Static Resources Will Never Scale

Static resources, such as dedicated in-house teams or traditional third-party services, have inherent limitations:

1. Capacity Constraints:

Internal teams play a vital role in the chargeback process. But internal teams and traditional third-party services are bound by their size. As chargeback volumes increase, these teams can become overwhelmed, leading to a drop in the quality of evidence or, worse, an inability to respond to all chargebacks. Both scenarios result in a net loss for the business. This capacity constraint is particularly problematic during seasonal peaks or unexpected surges in chargeback volumes, where the need for rapid and effective responses is most critical.

2. Cost Inefficiency:

Scaling an in-house team to meet increasing demand involves substantial investments in hiring, training, and technology. This approach can be cost-prohibitive, especially when considering the diminishing returns as transaction volumes grow. Moreover, the fixed costs associated with maintaining a larger team during periods of low chargeback activity can strain budgets and reduce overall operational efficiency.

3. Operational Strain:

High chargeback volumes can divert focus from core business activities, stretching internal resources thin and impacting overall productivity and morale. This strain can lead to burnout among employees and a decrease in the quality of work across other critical areas of the business. Additionally, the constant pressure to manage fluctuating chargeback volumes can hinder strategic planning and long-term growth initiatives.

Scaling Chargeback Management with AI

Justt enables customers to scale their chargeback management infinitely with the power of AI-driven automation. Here’s how this comes into play:?

1. Unlimited Capacity:

Justt's model is built for scale because it relies on automation rather than increasing headcount. Unlike static resources which will always be constrained by the need for manual work or oversight, Justt’s AI can handle virtually any volume of chargebacks without compromising on quality. This ensures that all chargebacks are addressed efficiently, even during peak periods, maximizing recovery rates. Businesses that use Justt can expand their operations without worrying about capacity limitations or resource constraints.

2. Advanced Technology and Expertise:

Leveraging advanced machine learning algorithms, integrations with multiple data sources, and a solution built on dynamic arguments rather than standard templates found in the market. Justt provides a higher quality of evidence and continuously improves its processes. This level of sophistication is challenging to replicate in-house without significant financial and resource investment. Justt’s technology not only enhances the accuracy and effectiveness of chargeback representment, but also identifies patterns and trends that can be used to prevent future chargebacks, offering a proactive approach to chargeback management.

3. At Scale with Justt’s Three-Bucket Approach:

Justt’s product is designed to operate at scale using a three-bucket approach to build quality representment:?

Bucket 1: PSP Connection - Integrating with over 39 PSPs to access all relevant chargeback data seamlessly.?

Bucket 2: Third-Party Data Integration - Enriches this data with insights from 10-12 external sources, such as geolocation and social media accounts.?

Bucket 3: Customer Data - focuses on tailoring the data based on specific customer journeys, ensuring that each chargeback is backed by the most robust and accurate evidence possible. This comprehensive approach guarantees that Justt can maintain high-quality representment regardless of chargeback volume.

Real-World Impact

To put this into perspective, consider a scenario where an internal team recovered approximately $700k in chargeback revenue over a 12-month period. With Justt, it’s projected that the recovery could reach $1.5 million in the same timeframe simply by improving evidence selection and ensuring that 100% of disputes are handled. Moreover, Justt’s model frees up internal resources, allowing teams to focus on core business activities rather than being bogged down by the complexities of chargeback disputes. This not only improves efficiency but also boosts overall productivity and morale. Analysts and other team members can redirect their expertise and energy towards strategic initiatives and customer-focused activities, driving growth and enhancing the customer experience. This is why time and again businesses choose Justt!

Time to Embrace Scalability!

As businesses navigate the complexities of chargeback management, the choice between static resources and scalable solutions becomes increasingly clear. Static resources, while capable, are limited in their capacity to handle growing demands. In contrast, scalable solutions like Justt offer unlimited capacity, advanced technology, and a comprehensive approach that significantly enhances revenue recovery and operational efficiency.

By leveraging scalable solutions, businesses can ensure they are not only prepared for the present but also poised for future growth. Analysts and internal teams can continue to play a crucial role in strategic planning and execution, while scalable solutions handle the operational demands of chargeback management.