Chargebacks Procedure
The merchant's account is debited along with any contractual chargeback fee(s) and the merchant must provide proof that the transaction is valid and satisfactory to the rules/regulations of Visa®/MasterCard to get money back.
Please note:
A chargeback handling fee is associated with each chargeback. This is a processing fee for handling the chargeback and/or subsequent re-presentment. The fee is not a penalty or a declaration that a merchant is right or wrong.
Procedures of :
- Bank or processor receives a chargeback from the issuing bank.
- Bank or processor mails notification of chargeback to the merchant, and the amount of the chargeback plus a handling fee (deducted from merchant’s settlement account). If more documentation is required to clarify the chargeback, then it is sought from the cardholder’s bank.
- If a merchant feels that a chargeback is invalid, then the merchant may send his rebuttal and supporting documentation, in a timely manner. Typically the merchant is required to respond within 10 days of the receipt of the chargeback notification.
- If the merchant has a valid rebuttal, then the Bank or processor re-presents the item to the issuing bank and reclaims the funds for the merchant.
Consequence for receiving too many chargebacks:
- Lost Product
- Chargeback Fees
- Fined by Card Associations
- Placed on Association Monitoring Program
- Loss of Merchant Account
- Terminated Merchant File
How many chargebacks are too many?
Visa®: more than 100 chargebacks with chargebacks in excess of 1% of total transactions.
MasterCard: more than 15 chargebacks with chargebacks in excess of 1% of total transactions.
Preventing Chargebacks
Most chargeback situations arise at the point of transaction—at the time the transaction is completed—and most online payment fraud can be prevented with a little training and prevention methods.
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