When a merchant receives a chargeback, chances are that the transaction in question took place weeks or even months ago, meaning the revenue was already accounted for at the time. Then, when they fight the chargeback, it can be another three to four months before it’s fully closed, even if the merchant submitted the dispute instantly. The bank has to review it. There’s an inquiry, a first representment, in some cases a second representment, then arbitration.
All told, it can take six months or more to process a single chargeback, and that makes it hard for merchants to handle their metrics around disputes. It affects risk, accounting and finance departments. Without timely transparency into win and loss rates, merchants are left guessing in many cases, and must occasionally backpedal if their educated guesses are wrong.
Pallavi Kuppa-Apte, Head of Business Operations at Chargehound, said this is exactly what she and the startup’s founders had experienced prior to launching the company, and it defined their priorities as they shaped a product to automate this lengthy process. She said automation is valuable, but simply doing chargebacks for a merchant isn’t enough. Merchants need transparency in their metrics so they can take action based on real-world numbers — recent numbers, not from transactions that happened half a year ago.
Some people want to look at a complete cohort of disputes that have been fully closed out to see how many dollars were fought for, won and lost. This helps them shape a concrete picture of their success rate, she said — but it falls victim to that lengthy wait time, so there must be other ways to look at the metrics along the way.
Kuppa-Apte said many merchants like to look at their wins and losses month by month to extrapolate future win and loss rates, which is why real-time results are needed in the chargeback processing space. Providing a full set of up-to-date information enables chargeback providers to have honest conversations with merchants around their volumes, timelines and true win rates.
“Everyone thinks of win rates differently, and people use their metrics differently,” said Kuppa-Apte. “It’s your data, and it’s a tool you can use to be more successful if you get it in the right form at the right time. You don’t want to be blind until you can get the numbers.”
Kuppa-Apte said this is the core value proposition that Chargehound was built upon, and it’s from that foundation that the startup is now planning to enter a growth phase.