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Accertify Inc. this week announced a service aimed at automating most of the functions merchants must follow to contest a chargeback, regardless of the payment method used for the original transaction. The Accertify Chargeback Service has begun a beta test with two unnamed clients and will be commercially available by June 30, says Jeff Liesendahl, chief executive of the Itasca, Ill.-based company, which was acquired late last year by American Express Co.
The need for chargeback automation is pressing at many merchants, Liesendahl says. Chargebacks are the process by which cardholders contest charges they didn’t make or don’t recognize when they receive their statement. A chargeback filing typically requires a merchant to dig up supporting documentation for the transaction, including such items as signed proof of delivery, and to respond according to rules that vary by card network. “It’s an incredibly manual process,” says Liesendahl. “The chargeback codes are different for each [card] brand. Imagine if you get tens of thousands of these a day.”
Accertify’s new product, a software platform that will be available either as an isolated product or as part of an outsourced service in which the company will take over the entire chargeback function on the merchant’s behalf, will be the first to handle chargebacks for all the major card brands as well as PayPal, Liesendahl says. The service will also automate chargeback responses for a variety of international payment systems, he adds. This will allow merchants to cut through much confusion at a time when they are adopting more payment brands to maximize sales. “The more payment streams you add, exponentially [chargebacks] get more confusing,” says Liesendahl.
The software will also run calculations to determine whether it’s worth the merchant’s while to respond in the first place. This determination depends on such factors as the cost to process the response, the amount in dispute, and the probability of winning the challenge. A $5,000 chargeback, though worth a substantial sum of money, may not be worth challenging if the cost to process is too high and the win rate on such challenges too low, Liesendahl points out. “It’s not just the cost of the chargeback, it’s the cost to fight it,” he says.
By automating much of the document lookup and processing functions required to contest a chargeback, the new product should allow merchants to devote fewer man hours of staff time to the function, Liesendahl says, thus reducing personnel costs. “We’re confident the majority of chargebacks [with the new service] are never going to touch a human hand,” he notes.
The service will also bring Accertify to the physical point of sale for the first time. Its other product, Interceptas, is aimed at online merchants and helps them fight fraud by automating order screening. But Liesendahl reasons Accertify Chargeback Service will primarily appeal to brick-and-mortar merchants looking for ways to automate a costly process that’s often touched off when customers don’t recognize a charge or, in some cases, try to repudiate a transaction they actually made. “It’s a service we’ll absolutely sell to brick-and-mortar merchants,” he says.
Accertify is still working out pricing for the new product. Liesendahl says. He figures the software-as-a-service model will require a per-transaction fee, while the outsourced service will likely levy a percentage of savings the product generates for the client.
Accertify, which Liesendahl cofounded in 2007, appears to be integrating smoothly into American Express. The card company’s worldwide reach is helping Accertify to get before prospects much sooner, Liesendahl says, and has allowed it to open new offices in London, Sao Paulo, and Mexico City, with one coming up in Sydney, Australia. Meanwhile, he says, there has been “zero turnover” at Accertify since the acquisition, which was announced in November in the wake of Visa Inc.’s takeover of CyberSource Corp., a transaction gateway and fraud-management company, and a deal along similar lines in which MasterCard Inc. acquired U.K. processor DataCash.
