Chargebacks and chargeback fraud are on the increase. If you run an ecommerce business, you’ll know that chargebacks and fraud don’t only threaten your profitability, they can ruin your relationship with your issuing bank. The life cycle of the dispute differs depending on the card scheme. Truevo provides chargeback handling and assistance to merchants throughout the whole process. We’ll help you every step of the way.
Let’s dive deeper into how chargebacks and disputes work at Truevo and how to deal with them when they do. Better still, how to avoid them if you can.
A chargeback happens when an issuer returns a purchase to the acquirer because the cardholder or purchaser of the product complained.
A dispute happens when an issuing bank returns funds used to purchase a product to the cardholder at their request. It’s up to the issuing bank to determine the reason for the request.
Different card schemes have different dispute life cycles.
Mastercard disputes follow this lifecycle and can take 45 to 75 days to resolve, and even longer when it is escalated. Visa has four main categories and two different cycles or processes depending on the nature of the dispute. You can see the Visa lifecycle here.
It’s important to know that Truevo only allows disputes if the merchant can prove the chargeback is valid.
You’ll notice that every chargeback or dispute comes with a reason code.
Visa and Mastercard reason codes differ. They provide various reasons for disputed transactions.
What to do when you receive a chargeback or dispute
When Truevo notifies you that there is a chargeback on your merchant account, there are various actions you can take. Just keep in mind that every chargeback has financial implications. Once you raise the chargeback, your account will be debited.
If you want to challenge the chargeback there is a process you need to follow. Here are some tips:
- Challenge the chargeback. It means the chargeback transaction will be sent back to the issuing bank stating that it is invalid
- If you want to challenge the chargeback, you need to provide documentation to Truevo proving that the chargeback is invalid
- Always reply to the original ticket
- Make sure you provide all documentation in the time frame you’re given
- If documentation is in any other language, translate the important information into English
- According to Visa regulations, you don’t have to provide KYC documentation like copies of a passport, credit/debit card or any other form of documentation as part of the dispute rebuttal
Some tips
You can’t avoid chargebacks and disputes completely, but there are some steps you can take to help you prevent them. Remember that the interaction in a dispute happens between the issuer and the acquirer. If you know that the cardholder contacting you directly has a valid dispute like a faulty product, act immediately to resolve it. If you send a credit to this customer, always do it via email to let them know they will receive their money back. Never pay any funds into any other card than the one that the dispute was raised from. Don’t use any other means either.
Sometimes you can’t avoid losing the sale. Some disputes can’t be fixed. Sometimes it’s easier, faster and cheaper to accept the dispute rather than go through the whole cycle.
We can’t stress keeping good records enough. If your house is in order, you can quickly respond to any disputes or chargebacks. The longer you wait, the more serious they can become.
The whole process starts with your website and refund policies. State and describe your products clearly and ensure you make no false claims that could lead to disappointment when customers receive their products. Make a hundred per cent sure you communicate your returns policy before the final checkout screen. If there’s a delay in delivery, let them know immediately. Tell your customer when they expect the product to arrive and explain why the delay happened.
If you charge customers periodically, ensure that any cancellations reflect immediately. Email the customer that their service has been cancelled and clearly state the date it will take effect.
Chargebacks and disputes are part of doing business. If you are prudent, you can reduce or eliminate them.
Speak to Truevo, we provide excellent 3D secure transactions as well as customer service that’s there for you when chargebacks and disputes happen.
Poll
We asked on Social Media, what percentage of online fraud is accounted for by chargeback fraud. The votes are in!
The Answer: Chargebacks—a type of credit card fraud—can account for between 40% and 80% of all fraud losses (Columbus, 2020).
