WooCommerce vs. Magento Which Is The Better eCommerce Platform

WooCommerce and Magento. Which Is the Better Ecommerce Platform for Chargeback and Fraud Management?

Chargebacks are a headache for merchants. They require administrative and detective work that takes time away from what merchants should be doing—selling, not fighting disputed transactions. But merchants can’t afford to ignore chargebacks if they are to keep their reputation. If chargebacks become a problem, credit card companies levy fines, impose stricter rules, and even cut ties with businesses.

Leading ecommerce hosting platforms WooCommerce and Magento offer extensive plugins and extensions to help merchants manage the chargeback process and perhaps even eliminate the causes. But which is better at managing fraud and chargebacks, and should an ecommerce merchant choose one or the other platform based on their chargeback management?

Here’s a look at what the two ecommerce platforms offer merchants regarding chargeback management.

The Chargeback Process

Chargebacks are the result of a payment dispute. They occur when a cardholder contacts their credit card company to dispute a charge on their bill. If the credit card company deems the claim credible, it issues a provisional credit to the customer’s account while the dispute is resolved.

There are usually two reasons for a payment dispute: either the customer is dissatisfied—perhaps they didn’t receive the goods or the goods were faulty in some way —or there was fraudulent card activity. Perhaps the customer didn’t remember ordering the goods, or another family member ordered the goods using another family member’s card.

We first look at how WooCommerce helps ecommerce merchants with the chargeback process and then examine Adobe’s Magento.

For more on WooCommerce, read “Looking for An eCommerce Platform? 15 Things Merchants Should Know Before They Commit to WooCommerce”

How WooCommerce Handles the Chargeback Process

WooCommerce has online guides to help the ecommerce merchant know what steps to take when facing a chargeback inquiry and what data and information to provide if they decide to challenge a payment dispute. However, this still boils down to substantial work for the merchant.

The Initial Stages of the Chargeback Process

It’s important that merchants respond immediately to an inquiry from a card network. If a merchant fails to respond to an inquiry, the card network will assume they are not going to contest the dispute. Also, there will be a set timeframe within which the merchant must gather and submit their evidence.

WooCommerce Payments notifies its users of an inquiry by both email and inbox notification on the WooCommerce platform.

Source: WooCommerce

Responding to the Initial Inquiry

WooCommerce Payments is a payments gateway for WooCommerce. It guides merchants through the response process on the Payments > Disputes page. The information includes recommended responses from merchants to the different types of disputes and outlines what information and evidence the merchant must provide to overturn the dispute

WooCommerce also guides the user in filling out the Challenge Dispute form with the necessary evidence. Dispute evidence might include web logs, emails, shipment tracking numbers, delivery confirmations, proof of prior refunds, and replacement shipments.

In response to an initial inquiry, the merchant can do one of three things: do nothing, accept the dispute and pay the funds to cover the transaction and the dispute fee, or challenge the dispute by submitting evidence to the card issuer proving that the dispute is not valid.

The first two responses are the most efficient way to resolve a dispute. If the merchant thinks the dispute is valid or does not have the required evidence to challenge the dispute, they should accept the dispute.

The card networks only look at the number of disputes your business receives, not the number of disputes you lose.

Responding to the Initial Inquiry

Source: WooCommerce

Challenging the Dispute

Before challenging a dispute, WooCommerce highly recommends that merchants contact the customer directly. Customers will often withdraw a dispute if they get more details that helps them to remember a transaction.

If the merchant still wants to challenge the dispute, WooCommerce gives detailed information to merchants on what evidence to provide for each of the following dispute types:

As an example, in the case of a fraudulent charge, WooCommerce states that the merchant must prove to the card issuer that the cardholder authorized the transaction. The cardholder may not be the same person as the customer with the store. The merchant must provide “compelling evidence.” For example:

  • Upload a customer signature to prove the person who signed for the products upon delivery was the cardholder, is known to the cardholder or authorized by the cardholder to sign.
  • Evidence of customer communication, such as photographs or emails to prove a link between the person receiving products and the cardholder or proving that the cardholder disputing the transaction is in possession of the products.

WooCommerce provides similar guidance for each type of dispute.

Preventative Steps by WooCommerce to Prevent Chargebacks and Fraud

It’s better to prevent chargebacks in the first place than having to go through the steps to challenge them. One way to do this is to review orders before accepting them.

WooCommerce helps merchants identify fraudulent or risky orders with a risk level indicator on the merchant’s dashboard. It grades every transaction for fraud risk. Orders not categorized as “normal,” on the dashboard should not be fulfilled before verifying the purchase with the cardholder.

WooCommerce Manages Inventory

A chargeback might result from a customer ordering an item that’s out of stock. WooCommerce can automatically remove stock that is unavailable from your site. There is an option to allow backorders or stop sales of out of stock items with merchants able to choose a setting from “Do not allow” or “Allow, but notifying the customer.”

Now, let’s turn to Magento

Related, read “17 Things Merchants Need to Know Before They Commit to Magento as Their Ecommerce Platform”

Chargeback Management by Magento

Adobe’s Magento is a more complex platform for merchants. It’s more hands-off for the merchant but more hands-on for coders, which adds to the cost. The platform uses plugins that require a significant level of programming expertise.

Adobe Commerce offers various chargeback protection and fraud management extensions on Magento Connect, although the difficulty lies in choosing the right ones.

Magento’s Chargeback Extensions

Magento’s extensions offer manual and expert screening of transactions to prevent chargebacks in the first place. The solutions use fraud analysts combined with artificial intelligence (AI) tools to flag suspect transactions for a store. These tools also search for proof of fraudulent activity by analyzing customer data for behavior anomalies and other fraud indicators.

Initial Stages of Chargebacks

Magento, too, issues transaction alerts so merchants can cancel orders, disable services, deactivate gift cards, prevent fees, and reduce their chargeback ratio. Magento Chargeback protection creates an API key and user account that allows Chargeback to gather data and perform time-sensitive actions, such as canceling orders flagged for fraud by card issuers or alerting merchants of payments disputed by customers through their bank.

Challenging Disputes

Magento ChargeBack protection delegates the chargeback disputes to a third-party provider. That provider fights disputes on your company’s behalf and covers the cost of disputed funds and also the chargeback fee.

Chargeback uses transaction, product, customer and other order information to build comprehensive dispute responses. Chargeback will pull all of the data it needs for each dispute and submit the response to the merchant account processor.

Chargeback collects responses to customers, product and order details, including geo-location, IP address, CVV, and AVS data to build strong cases for chargeback resolution.

Magento Blacklists Customer Accounts

Magento Chargeback also creates a blacklist, or a deny list, to block certain customer accounts from placing orders. By deciding which orders to approve and decline, the merchant can accept more legitimate orders. If a fraudulent attempt is identified, the chargeback company pays the costs.

Reports and Analytics

The Chargeback extension provides reporting and analytics to improve fraud filters and operations. The plugin’s dashboard displays the order grid, order approval rate, and order trends. Services offered from Chargeback Reporting Alert, dispute, and transaction data is visualized in your Chargeback dashboard to help you understand where you can improve fraud filters and operations to further reduce fraud and disputes.

Merchants are responsible for checking how their chargeback services affect PCI compliance, and any integrated payment plugins should be well tested.

Related: “How WooCommerce and Magento Are Tackling Fraud Protection

Magento Wins for Large-Scale Operations; WooCommerce for Small-Scale Operations

Both WooCommerce and Magento have up-to-date chargeback and fraud management tools and plugins that incorporate AI and manual screening. Which platform is better where chargebacks are concerned really comes down to the volume of sales you have.

Magento is designed more for large-scale operations, and it demands specialist resources, such as coders, to handle the plugins and expert payment services to integrate payment gateways.

WooCommerce, on the other hand, is more geared toward the smaller merchant who needs a simpler, yet secure solution to minimize chargebacks and fraudulent transactions.

Contact Cartis Payments for expert advice on how to integrate the best payment gateways to manage chargebacks and minimize fraudulent transactions.