The Executive Interview Series provides readers with exclusive insights from movers and shakers in the payments industry. The payments industry is under continuous transformation, as such this series provides diverse perspectives on everything from strategy to payments technology and to the future of the industry.
In this interview, TSG marketing team member Rachel Hartley spoke with Tim Tynan, CEO of Chargeback Gurus (CBG), to discuss the increase in chargebacks, their impact on profitability, and how his company helps merchants reduce friendly fraud.
Background: Tim Tynan began his involvement with Chargeback Gurus as a member of the company’s board since August 2021. He was appointed CEO in November 2022, utilizing his expertise in finance and operations to drive the firm forward. Prior, he served as the CEO of Bank of America’s merchant services and held esteemed leadership positions at both IBM and Citigroup.
Q: Rachel H.
How have your past experiences in the payments industry shaped the way you approach your role as CEO of CBG?
A: Tim T.
I have held many roles in the payments industry. I have been a technologist, a fintech executive, and a banker. I’ve learned how quickly things can change throughout each of these roles. The industry and our clients are moving much faster than we have experienced before, and the companies that lead are the ones that can get ahead of the needs of the ultimate consumer. I’ve also had extensive experience working directly with clients, shaping my leadership style to put the customer above all else.
My experience also taught me that companies who leverage the information and data that payments enable to grow their business, provide better services, and innovate in a way that differentiates them in the marketplace are the ones that win.
My personal “servant” leadership approach is always to prioritize clients, employees, and then the company. Great leaders know that it is about serving others and not themselves. I have been fortunate to be guided by learning from outstanding people in my career. I spent years at IBM, Citigroup, and led the Bank of America & Fiserv merchant services JV. During these years, I was blessed to work with and be in the presence of amazing senior executives in those firms that shaped the person and leader that I am today.
Q: Rachel H.
What is your vision for the future of CBG? How do you plan to make that vision a reality?
A: Tim T.
My vision for CBG is to be the “go-to” organization to help companies reduce fraud and chargeback exposure. I envision us as being viewed as a partner that is the best—providing the highest quality tech-enabled services with unique data science techniques that result in the best outcomes and are always considered 100% aligned with our client’s objectives.
We will continue to aspire to this vision and focus on the best technology, the best team, and execution to make it a reality. I have seen what great organizations look like, and CBG will be that great company.
Q: Rachel H.
How common are chargebacks in the payments industry, and what are some of the main reasons that they occur?
A: Tim T.
27% of retailers say that chargeback volume has increased. E-commerce transactions continue to rise, with total US e-commerce sales hitting a record high of $1.03 trillion in 2022 after recording a 7.44% annual increase. As e-commerce transactions increase, so will the number of disputes that need to be resolved. The industry will see even more sophisticated data science and analytics introduced in the coming years to respond to this volume.
Fraudulent transactions can take the form of true fraud, which results from a criminal stealing a cardholder’s payment credentials and using them to make unauthorized transactions or friendly fraud because of misuse or error.
No authorization chargebacks are most often caused by the merchant making some error in authorization. Also by skipping the authorization process entirely. Fraudsters may try to persuade merchants to process stolen cards without going through the proper authorization protocols. Even knowing that a “stolen—pick up card” response might give them away. This usually results in a chargeback.
Finally, canceled recurring happens for subscription services, which are often difficult for consumers to track. When payments go out, this typically serves as a reminder that the subscription is active. Users sometimes then question these payments and raise chargebacks when they have yet to remember to cancel, which causes an issue for merchants.
Q: Rachel H.
How do chargebacks impact a company’s profitability? How do companies typically respond to them?
A: Tim T.
On average, merchants lose up to 15% of their revenue to chargebacks. According to Pymnts.com, 77% of merchants say the costs from fraud and disputed transactions have been among the largest sources of disputes-related pain during the past year. Most need more resources, knowledge, or tools to effectively fight and prevent these chargebacks. That’s why merchants turn to CBG to prevent disputes and recover their lost revenue.
We have clients that come with different levels of expectations. Within the first group, we have clients with internal capacity who struggle to process their full volume. They also have a relatively low recovery-win ratio. These clients recognize that they are not fighting all the cases they potentially can but run into capacity bottlenecks and sometimes lack understanding of what it takes to win. The CBG tech-enabled solution, combined with world-class industry analysts, allows us to intake 100% of their volumes immediately and reach win rates they have never seen before, often doubling or tripling their recovery rate.
Some companies do not fight and just write off most of their disputes. It’s always a welcome surprise for these clients to see how much opportunity they have left behind. These companies share a common trait – not fully understanding the complexities of efficiently managing chargebacks at scale.
Q: Rachel H.
What advice would you give companies seeking to prevent chargebacks? How does CBG assist in the process?
A: Tim T.
Our advice is to continuously review operational issues and fix any procedures leading to merchant error chargebacks, provide excellent customer service 24/7 to help reduce friendly fraud, and use clear billing descriptors to prevent customers from filing disputes in error because they don’t recognize a charge. Updating the merchant descriptor is an easy step to prevent first-party misuse resulting from forgetfulness or confusion. The merchant’s name in the descriptor should match the name the customer knows the merchant by. It should include as much contact information as possible, including a phone number and a shortened URL that leads to their homepage.
CBG offers deep dive analytics (50+ vulnerabilities) to help merchants reduce chargebacks organically. We leverage technology and industry specialists to understand chargeback root causes and fix vulnerabilities causing chargeback spikes for merchants. When fighting chargebacks for merchants, we utilize custom dispute packages specific to the merchant’s industry, the nature of the transaction, the chargeback reason code, the issuer/acquirer, and the end customer’s buying patterns. At CBG we frequently see a win rate that is often two times the 20-40% average industry rate of manual in-house teams.
Q: Rachel H.
Friendly fraud is a common pain point for many merchants. How does Chargeback Guru’s services work to limit this?
A: Tim T.
CBG helps merchants with the representment and prevention process to fight friendly fraud. With the right evidence, merchants can convince the issuing bank to reverse the chargeback. We help merchants keep meticulous transaction records and save copies of communications with customers, as well as understand the card networks’ reason codes so they know what sort of evidence is needed for a successful representment.
We also help merchants identify customers who engage in first-party misuse to prevent them from becoming repeat offenders. When a fraudster realizes they can get away with stealing from a merchant through this process, they will do so again and again until the merchant blocks them.
In addition to the immediate revenue recovery of chargeback representment, we help merchants dig down to the root causes of their chargebacks and identify the real sources of the problems they’re experiencing. In many cases, this deeper analysis can help the merchant make permanent changes to their operations that significantly reduce future fraud losses.
Q: Rachel H.
How do you see chargebacks evolving in the coming years?
A: Tim T.
The payments industry continues to evolve, which impacts the way chargebacks occur and are fought. Visa, MasterCard, and American Express continue improving the rules and evidence required to reduce chargebacks. For example, Visa’s new CE 3.0 provides merchants with a standardized set of evidence categories and requirements designed to help merchants present a more convincing case supporting their transactions. As these requirements improve, so will a merchant’s ability to reduce chargebacks.
On the flip side, e-commerce transactions continue to rise, with total US e-commerce sales hitting a record high of $1.03 trillion in 2022 after recording a 7.44% annual increase. As e-commerce transactions increase, so will the number of disputes that need to be resolved. In the coming years, we will see even more sophisticated data science and analytics to respond to this volume.
Q: Rachel H.
What sets CBG apart from other companies in the industry? How do you plan to leverage those strengths?
A: Tim T.
CBG has worked with over 90 different processors to recover hundreds of millions of revenue for our clients. We have the highest win rate in the industry. At CBG, we believe that we have the best combination of machine and mind to solve the toughest cases. We give our clients the peace of mind they deserve. At the end of the day, we will be able to recover as much revenue as possible for them.
We will leverage these strengths to continue driving innovation to increase win rates for our clients with our tech-enabled chargeback prevention and revenue recovery solution.
Q: Rachel H.
What excites you most about the future of the payments and chargeback industry, and how do you see CBG playing a role in that future?
A: Tim T.
The payments industry is constantly changing but has never been about the payment transaction itself. It is about the data and the business opportunities that result from the transaction. Information about the clients, markets, products, and people’s behaviors – is what drives “change”. For example, we all carry a smartphone with us that we interact with many times. The average smartphone owner will click, tap, or swipe their phone over 2,600 times daily. Those interactions involve looking up information, connecting with work colleagues or friends, and often buying something. It might be a train ticket, food, or new clothes. The information about those interactions (or transactions) drives change! Understanding the change and its impact on new business models is exciting. New problems are being solved with technology, payment data, and consumer behavior driving transactions, including disputes and chargebacks.
Being part of that change is what excites me. Solving problems is what excites me and my colleagues at CBG. We play a small but important and vital role in the payments ecosystem. At CBG, we are proud to participate by assisting our clients in solving their problems and managing through this constantly changing world.
Related: Fraud-as-a-Service: How to Wrestle It to the Ground