Chargeback monitoring programs
Card brands employ chargeback monitoring programs as both a punitive measure for excessive chargebacks and a corrective strategy to help merchants better manage chargeback activity. These programs are designed to identify merchants whose chargeback rates exceed industry-standard thresholds, indicating a high risk to the card network and the financial institutions involved.
Acquirers play a pivotal role in this ecosystem by continuously assessing the risk profile of each merchant under their purview. This involves evaluating specific risk metrics that reflect the merchant's chargeback performance. Should these metrics exceed the card brands' established thresholds, the acquirer must enroll the merchant in a monitoring program.
These monitoring programs aim to mitigate potential financial losses and protect the payment system's integrity by ensuring merchants adhere to best practices for chargeback prevention and resolution.
Acquirers play a pivotal role in this ecosystem by continuously assessing the risk profile of each merchant under their purview. This involves evaluating specific risk metrics that reflect the merchant's chargeback performance. Should these metrics exceed the card brands' established thresholds, the acquirer must enroll the merchant in a monitoring program.
These monitoring programs aim to mitigate potential financial losses and protect the payment system's integrity by ensuring merchants adhere to best practices for chargeback prevention and resolution.
Participation in a monitoring program often requires merchants to take corrective actions to lower their chargeback rates, such as implementing more stringent fraud detection measures, improving customer service practices, or revising transaction processing procedures.