In today’s robust and increasingly online business landscape, it’s especially important to understand the complexities of refunds and chargebacks. These two distinct, yet interconnected processes both involve customers wanting their money back for a transaction you previously processed for them. Your refund and chargeback volume—along with the processes by which you navigate and resolve these disputed transactions—directly impact your business’s financial well-being and reputation among customers. In this blog post, we will delve into the intricate world of refunds and chargebacks, shedding light on their definitions, functions, and how Peacock by Pagos helps you manage them efficiently.
The Relationship Between Refunds and Chargebacks
Refunds are typically voluntary actions initiated by the merchant or business in response to a customer’s request for full or partial transaction reimbursement. They’re commonly issued in situations where customers are dissatisfied with a product or service, encountered billing errors, or experienced other legitimate concerns. Merchants control the refund process, meaning they define their own refund policies, timeframes, and procedures; they even have the power of approving or denying a customer’s refund request.
Chargebacks, on the other hand, are initiated by customers through their bank. As such, they’re a means for customers to dispute a transaction and request a refund from their bank, not the merchant directly. Customers resort to chargebacks for various reasons, including unauthorized transactions, fraud, billing discrepancies, refund difficulties, or failure to receive the promised goods or services. While refunds are voluntary actions by the merchant in response to a customer’s concerns, chargebacks are initiated by the customer, involve card-issuing banks, and can result in funds being automatically taken from the merchant’s account and returned to the customer. This process is regulated by card brands and financial institutions, and places the burden on merchants to prove the validity of transactions.
Businesses need to implement robust systems and practices to handle refund requests efficiently and minimize chargebacks, while also ensuring they deliver on and support the goods and services they offer. Doing so ensures both financial stability and customer satisfaction. Here at Pagos, we believe organizations should treat refunds and chargebacks as learning opportunities for improving business practices and fostering the types of long standing customer relationships we all seek. By analyzing the reasons behind these dispute requests, they can proactively address the root causes to prevent similar issues in the future. Let’s see how Peacock by Pagos helps you address these matters in a timely manner.
The Refunds Dashboard in Peacock
There are many factors to consider when dealing with refunds. Companies need to establish clear refund policies, streamline refund authorization processes, provide timely customer support, track refunds, and analyze trends, among others. To provide clarity and transparency to how your business is processing and managing refunds, we’ve designed an entire dashboard in the Peacock Service Panel dedicated to displaying your refund data, broken down by various payment attributes. Introducing: the Refunds dashboard.
This recently revamped dashboard contains a set of comprehensive new charts that provide valuable insights into the realm of refunds. As refunds play a crucial role in the world of commerce, understanding their patterns and trends can be instrumental in improving business operations, enhancing customer satisfaction, and optimizing financial processes. These new charts offer a detailed glimpse into different aspects of refunds, empowering businesses and organizations with data-driven decision-making capabilities.
- Aggregated Refunds: This chart delivers an overview of your business’s total refund count, value, and refund rate over a specific time period. By tracking aggregated refund trends, you can identify patterns, spikes, or seasonal variations, enabling you to proactively manage your financial resources and anticipate customer demands.
- Currency Refunds: This chart visualizes the distribution of refunds across various currencies, shedding light on the geographical reach and customer base of refund requests. Analyzing this chart helps you identify regions or markets where refunds are more prevalent so you can tailor your strategies accordingly.
- Processor Refunds: This chart offers insights into the performance of different payment processors in handling refunds. With this data, you can evaluate the efficiency and reliability of your payment partners, ensuring seamless refund processes and minimizing disruptions for customers.
- Top 25 BINs by Refund Volume: BINs (Bank Identification Numbers) are the first 6-10 digits of a credit or debit card number that provide valuable information about the issuing bank or institution. This chart showcases the top 25 BINs associated with the highest refund volumes or refund rates. We have also added the ability to identify refunds by their original transaction date, allowing you to correctly identify and link the refund to the transaction that originated it.
- Refunds Status: Tracking the status of refunds is crucial for businesses to ensure timely and accurate resolution. This chart provides an overview of the number of refunds with each given status (e.g. pending, approved, or disputed). By monitoring this data, you can identify bottlenecks in the refund process, proactively address customer concerns, and optimize internal workflows.
- Payment Method Refunds: The ever-growing number of different payment methods available in the market adds another layer of complexity to refunds processing. In this chart, we provide a breakdown of the count, value and share of the refunds by your different payment methods.
As a side note, the more data you pass with your transactions, the more value you can derive from the Refunds dashboard. For example, if you tag each transaction with metadata that identifies the product sold, sales channel, or other distinguishing variable, you can then filter refund volume by those variables, as well. Doing so can provide more insite into the specific types of transactions customers request refunds for. Learn more in our Labeling Transactions with Soft Descriptors or Metadata guide.
The Chargebacks Dashboard in Peacock
In addition to the refund charts shown above, we have also introduced a set of powerful data visualizations that delve into the world of chargebacks, shedding light on crucial information that can transform the way you handle disputes and mitigate financial risks. Chargebacks are a significant concern in the realm of transactions, and understanding trends and patterns in the types of chargebacks you typically face is essential for maintaining financial stability and optimizing operations. For example, are customers initiating chargebacks due to legitimate concerns with your services or recurring billing practices? Are you processing transactions without first receiving authorizations? Are you experiencing fraud attacks?
With the Chargebacks dashboard in Peacock, you can answer these questions and more, allowing you to make informed decisions and take proactive measures. This dashboard contains the following new and improved charts:
- Aggregated Chargebacks: This chart offers an overview of the total chargeback count, value, and rate over a specific period. If your chargeback rate doubles, for example, you’d want to know this immediately so you could address and manage your fraud policies accordingly. By monitoring aggregated chargeback trends, you can identify patterns, peak periods, or recurring issues, Similar to the refunds charts, you can also view chargebacks by their original transaction day.
- Chargebacks by Issuing Country: This chart provides a visual representation of chargebacks based on the countries where the issuing banks are located. By analyzing this data, you can identify regions with higher chargeback rates, identify potential fraud hotspots, implement targeted risk mitigation strategies, and enhance fraud detection systems.
- Chargebacks by Processor: This chart provides insights into the performance of different payment processors in handling chargebacks. Evaluating this data allows you to assess the effectiveness of your payment partners in chargeback management and dispute resolution, helping you make informed decisions when selecting or optimizing payment providers.
- Top 25 BINs by Chargebacks Volume: This chart showcases the top 25 BINs associated with the highest chargeback volumes.
- Chargebacks Reason Codes: Understanding the reasons behind chargebacks is critical to effectively addressing and preventing them. This chart categorizes chargebacks based on reason codes, providing insights into common chargeback triggers such as fraudulent activity, delivery issues, or dissatisfaction.
- Chargebacks Average Order Value: This chart showcases the average order value (AOV) associated with chargebacks. Analyzing this data allows you to identify potential trends or anomalies in chargeback amounts, assess the impact of chargebacks on your revenue streams, and implement strategies to mitigate financial risks. Typically, real fraud is two times higher than friendly fraud or non-fraud. With this chart, you can quickly compare the AOV of fraudulent vs. non-fraudulent transactions to determine how big of a problem real fraud is for your business.
If you’re interested in digging even deeper into your chargeback data, you can always make use of the Peacock data filters. These filters allow you to adjust these charts to only show data for chargebacks made using specific payment methods, card types, or in selected currencies (among others). Learn more about the Peacock filters in the Pagos Product Documentation.
Ready to Get Going?
In summary, refunds and chargebacks are customer disputes linked through their shared goal of returning funds to customers. While refunds are initiated voluntarily by the merchant, chargebacks are customer-initiated disputes facilitated by card issuing banks. Ultimately, by prioritizing a thorough understanding of refunds and chargebacks, businesses can forge stronger customer trust, enhance operational efficiency, and drive long-term success in an increasingly competitive marketplace.
In a world driven by data, Peacock’s latest features empower you to unlock the true potential of your information. Leverage Peacock’s comprehensive analytics to gain a competitive edge, propel your business forward, and uncover the hidden riches that lie within your data. And if you’re ready to go a step further, Canary by Pagos—another Pagos microservice—can even help you detect unexpected changes in your refunds or chargebacks and alert you to any anomalies you may want to investigate. Get started today!
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