Chargeback of goods can be a complicated process. Merchants can prove that customers have filed a chargeback or are angry about an order. Merchants can use the card that is associated with their purchasing and issuing bank to act as a mediator between the customers and the merchants in order to dispute chargebacks, and eventually win. The financial ecosystem includes the purchase and issuing banks accounts. Merchants face steep opposition when trying to protect their customers.
Why are chargebacks so common?
The first step is to make a start. Recently, banks introduced a mechanism to settle disputes regarding credit card payments. When a user doesn’t authorize a charge, the consumer can challenge it. When the issuing bank thinks the cardholder’s case can be resolved by calling a refund to reverse payments, they charge back the cardholder’s account. It’s a valuable customer-protection mechanism. For protecting consumers’ rights, and to prevent unauthorized access of information, charge-backs are vital. Chargebacks have become more effective and common with the rise of eCommerce.
When a credit card company returns funds to the cardholder for disputing a card transaction, it is called a chargeback. When a cardholder is unhappy with their purchase, and asks for a refund from the issuer of their credit card, chargebacks are common. The card issuer initiates the chargeback process to recover the funds from the merchant’s bank. These chargebacks are often caused by fraudulent transactions or errors.
Different kinds of chargebacks
There are many types of chargebacks. Each type can be triggered by specific reasons or disputes. These are just a few examples of common types of chargebacks.
Fraudulent transactions
This happens when the cardholder disputing a transaction is deemed unauthorized or fraudulent.
Processing errors
When a chargeback occurs, it is usually because there was an error in processing the transaction. For example, incorrect amounts being charged.
Product or service dissatisfaction
When a cardholder is unhappy with the product or service they have purchased and asks for a refund, these chargebacks are made.
Customer disputes
When a cardholder contests a transaction, they are called chargebacks.
Procedure to win a chargeback
If you want to resolve a chargeback issue, follow the steps outlined by your bank or processor. The following are typical steps for this process:
Identify the Reason Code| Identify the Reason Code
The chargeback reason codes are shorthand to describe the reasons why an unauthorized transaction was submitted. It is vital that you know them. Although the reason code may not represent the actual purpose of the charge’s return, you must respond in the manner provided. This website has the purpose code.
Step 2: Respect time limits| Respect the time limits
Responding to inbound charges is possible with very limited exceptions. After submitting a representation form prior to the deadline, you are responsible for your case and must follow the allowed time limits. The card schemes determine the time required. These are detailed in the mail you send. The charge limits are explained in the letter you send us.
Step 03 | Assemble Compelling Evidence
Your evidence is key to your whole case. Your evidence may also be persuasive. What banks consider attractive is how they view institution card networks and reason codes.
Step #4 – Write a Rebuttal Note| Write a Rebuttal Letter
The evidence must be contextualized. To make a strong argument, you must present your viewpoint on the matter. Your credit card company must be notified in writing that your claims cannot be enforced. This book provides facts in a professional manner, without any emotional or overt explanations. Step 05 | Complete & Submit Your Representation
You can submit a case once it is completed. For the required documentation, the acquirer will review the case. It is sent to the cardholder’s issuing bank to be finalized. It’s not necessarily necessary to know how to recover charges for unauthorized purchases. To compile this report, you will need specialized skills and knowledge.
Provide evidence to support it.
How can I increase my chances of winning chargeback disputes?
You can improve your chance of winning a chargeback if you’re merchant.
1. You must respond quickly to any chargeback and present all evidence to back up your claim. You can provide proof of delivery or transaction as well as any other information to support your case.
2. You should follow the instructions of your credit card processor or acquiring bank regarding dispute resolution. This usually involves providing evidence and arguing why the chargeback should never be reversed.
3. You should be prepared to bargain with your card issuer. You might reach an arrangement that both you and your cardholder are happy with, like a partial refund or replacement product.
4. If the card issuer cannot settle the matter, the customer may need to take the matter to arbitration (e.g. Visa, Mastercard). After reviewing the evidence, the card network will decide on the dispute.
It’s important to note that the outcome of a chargeback dispute can be challenging to predict, and the process can be time-consuming and complex. If you have strong and convincing evidence, it may be possible to reverse the chargeback. Learn the submission deadlines and times.
Learn the timelines and deadlines to submit evidence
Customer who dispute the charges must contact their bank. In order to meet the stipulated deadlines, the merchant needs to be able to quickly respond to any charges that are being put on by the acquirer. MasterCard chargesbacks are more common than Visa chargebacks.
Present your argumentative and clear chargeback in writing
If you’re presented with a return, it is important to send a letter stating your case. While the letters can be short, they must convey to the reader the fact that the client is not entitled to make a claim.
Collect customer transaction details upfront
For merchants to contest unreasonable charges for transactions data and purchases, they must provide strong proof. Keep this information in your possession to maximize your chances of winning chargeback disputes.
What merchant of record is able to help in a chargeback dispute?
Merchant of Record (MOR), is an entity that processes transactions for another company. You can improve your odds of succeeding as a merchant of records if you want to resolve a chargeback matter.
1) Collect evidence. Gather all documents that prove that the transaction was legal and the customer actually received the products or services that they purchased. You may need receipts, invoices or contracts. Delivery tracking information is also important.
2) Address the dispute. Once all evidence has been gathered, you can address the issue with the credit card company or bank that issued the card. You can either submit the evidence online, or write a response.
3. Explain the situation. Be sure to explain clearly the situation. If there were delays in delivery, please explain them and show proof that they finally delivered the goods.
3. Be patient. The resolution of a dispute over chargebacks can take time. Keep in touch with your bank or credit card company so that you are informed about the progress.
Important to remember that the outcome in a dispute over chargebacks will be determined by the facts of each case as well as the evidence provided. If the issuer bank of credit card company is unable to resolve it, the customer may choose to escalate the case through the card network. Or to pursue legal remedies.
PayPro Global, a payment processor company that provides a variety of services for merchants to manage disputes and chargebacks, is PayPro Global. PayPro Global offers several services to help merchants manage chargebacks, including:
● Providing support and guidance throughout the chargeback process
● Offering tools and resources to help merchants build solid cases and provide compelling evidence in disputes
● Automating the chargeback response process to help merchants respond promptly and efficiently to chargebacks
● Negotiating with card issuers on behalf of merchants to help resolve disputes
● Providing chargeback prevention services to help merchants reduce the risk of chargebacks in the first place
PayPro Global is able to assist merchants in navigating the complicated and tedious chargeback process. They provide support and expertise that can be used by merchants to win charges and lower their risk.
Completing evidence for different merchant verticals
It will depend on which merchant vertical you work in. These are examples of different types of evidence which may be applicable to merchant verticals.
● Retail: Proof of delivery, purchase, receipts, invoices, return policies
● Digital goods: Transaction details, proof of delivery (e.g., email confirmation), proof of purchase
● Travel: Proof of reservation, payment, itineraries, cancellation policies ● Services: Proof of performance, contracts, proof of payment, receipts
It’s important to note that this is not an exhaustive list, and the specific evidence you will need to provide will depend on the individual circumstances of the dispute. It’s always a good idea to consult your acquiring bank or credit card processor for guidance on the specific evidence requirements for your merchant vertical.
Conclusion
To avoid falling prey to fraudulent customers, businesses must understand the chargeback procedure. Understanding the details of this process will help you protect your company from any financial loss.
