Combating Chargebacks with Enterprise Resource Planning

Combating Chargebacks with Enterprise Resource Planning

The growth of e-commerce is enormous and has led to a rapid increase in online transactions. Recent research projects the total transaction value of digital payments to hit $9.4 trillion in 2023. It makes it crucial for players along the supply chain to meet market demands, from convenient payment systems to easy-to-use platforms.

However, the impact of chargebacks on your business grows as the transactions increase. Manufacturers are impacted most when wholesalers purchase a lot of products but try to file false and unjust chargebacks to get back some of their money. You’ll need to implement an effective chargeback management system to add transparency and reduce these costs. Here is everything about chargebacks and how ERPs like GoldFinch can help.

What Are Chargebacks?

Chargebacks are costs that significantly affect your business’s profitability. It occurs when a customer’s card-issuing bank reverses a transaction because they had a dispute. The chargeback process is long and can cost your business massive losses.

The process starts with the wholesaler contacting their bank to dispute the transaction. It can be a transaction validity issue or fraudulent activity on their card. For the manufacturer, it’s costly and time-consuming. If they feel the chargeback is incorrect or fraudulent, they must dispute it and recover their money.

Challenges Manufacturers Face when Managing Chargebacks

A 2021 Chargeback Field Report concluded that chargeback management was among the top challenges for most businesses. It becomes even more challenging for manufacturers who deal with dozens of raw materials, products, and distributors.

The following are some of the challenges faced by manufacturers when managing chargebacks:

Identifying Chargeback Sources

For a chargeback to be valid, the issuing bank must attach a chargeback reason code. This code explains why the cardholder disputed the transaction. However, the chargeback reason code provided doesn’t always present an accurate picture.

It can be because of a simple error, a misunderstanding on the customer’s card, or a deliberate attempt to get free services. The challenge comes when identifying the chargeback sources, as the codes provided are unreliable.

Preventing Criminal Fraud

Another challenge manufacturers face when managing chargebacks from wholesalers is preventing criminal fraud. Even with the best fraud detection tools, fraudsters will still find vulnerabilities in your system to exploit. They leverage the chargeback system and attempt unauthorized transactions submission at higher rates. Your business will likely fall victim if you lack an effective chargeback management system.

Contesting Illegitimate Claims

You don’t always have to accept the losses when a wholesaler files a friendly fraud chargeback claim. The representment process allows you to contest the claim by presenting the transaction to the issuer again with supporting evidence and documentation. Although you’ll still pay, you can recover some of your revenue and discourage any friendly fraud cases in the future.

Decreasing the Chargeback Rate

The chargeback rate is among your business’s most vital key performance indicators. It’s a figure measuring your monthly chargeback issuance over your overall transactions and is tracked by the card schemes. Exceeding the limit set by your card network will have you placed in a chargeback management program. It means more restrictions on your business and higher fees.

How ERP Helps Combat Chargebacks

Implementing a robust ERP like GoldFinch would be best to manage chargebacks effectively. These platforms feature a chargeback management system, providing the tools to win and prevent chargebacks by tracking and analyzing data. Here is how ERP implementation will help manage chargebacks:

Helps with Revenue Recovery

Chargeback management helps protect your business from losses by reducing the financial impact of each dispute. You’ll need an ERP system with chargeback alert software to monitor user data across your transaction.

The system should also identify suspicious claims and help deflect them immediately after wholesalers contact their bank. Revenue loss decreases with how well your team responds to these illegitimate claims.

Promotes Transparency

ERPs use centralized storage systems to store and manage company data, significantly boosting transparency. For manufacturers, the platform helps provide a more comprehensive visibility of company operations and driving factors. A transparent system means you have better knowledge of how company resources get spent and recovered.

Encourages Accountability

Implementing an ERP to handle your chargeback management will ensure all business units are accountable. The system clearly shows your business’s value, helping management make more informed decisions. It also helps ensure transparency and efficiency by encouraging employees to change their attitudes and behavior.

Improved Fraud Prevention

There are several chargeback reason codes validating consumer claims. However, the numerous reasons for chargebacks make it a hotspot for chargeback fraudsters. You’ll need an ERP to help configure a chargeback management software that limits fraud instances and creates a safe payment environment.

Promotes Interdepartmental Collaboration

ERPs also help web together your entire organization, streamlining operations and increasing efficiency. Regarding chargebacks, your accounting team has to coordinate with other departments to access valuable wholesalers’ information, like purchase history and payment. A system that makes collaboration easy allows you to expand your operations effortlessly.

Improved Customer Protection

Another advantage of using ERP to help manage chargebacks is the customer focus it guarantees. It helps eliminate resource hoarding to reduce overall consumption and avoid underutilized assets. Your business will benefit from improved wholesaler relationships, accountability, and optimized customer satisfaction.

Will GoldFinch Help?

For manufacturers looking for a comprehensive ERP to solve their chargeback management problems, GoldFinch has you covered. GoldFinch ERP offers advanced tools and features to help streamline and grow your business. It unifies all your data in one platform, provides an end-to-end view of your business, and automates repetitive tasks to increase productivity.

GoldFinch helps simplify the chargeback process by making it easy to contest illegitimate claims from wholesalers. The platform helps collect evidence to prove the claim is inaccurate and unwarranted by allowing your team to track a product’s lifecycle and conclude whether the chargeback claims are valid.


Implementing Enterprise Resource Planning in your manufacturing operations is a sure approach to effectively managing chargebacks. Platforms like GoldFinch help achieve a chargeback management program to create a secure wholesaler payment approach while preventing friendly fraud. Note that not managing your chargebacks exposes your organization to increased chargeback rates and significant loss of revenue. So, let’s get started today!

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