ChargeBacks

This is a short outline of the chargeback process so you can get an idea of what it is and what you can do in view to a disputed transaction.

A chargeback begins when the cardholder contacts his card issuer and informs them that he is disputing a charge, which is on his current month credit card statement. Most issuers usually request their cardholder to send a written statement describing in detail, the conditions of the transaction at issue. Mostly before a chargeback is initiated, the card issuer requests a copy of the sales record from the merchant as well. If there are sufficient evidences in support of the cardholder’s request, the card issuer reverse the transaction of the same amount, through Visa or MasterCard gateway, back to the credit card merchant processor (your processing bank), which, if not able to resolve the matter, may contact the card member for more additional information. This means that the card member should directly deal with their payment processor. Tell them in detail what happened and provide them with supporting evidence.

It is important to be aware of that the Credit Card Associations of Visa and MasterCard play a vital role of an intermediary and have the last word on the authenticity of a dispute. When the Credit Card Network detects an untrue chargeback, it is automatically returned to the card issuer that originated it and the merchant and merchant bank never see it again. Many merchant banks also have systems in place for reviewing disputes, which allows them to resolve issues before a chargeback is initiated. Together, these systems ensure that the chargeback that a cardholder receives is legitimate.

If you provide sufficient evidence to justify a reversal of the chargeback, your credit card processing companies will forward the depiction to the issuer through the Credit Card Association (Visa or MasterCard). In real meaning, the transaction will be reinstated and you will get your money back.

Merchants should make every possible effort to avoid any chargebacks altogether. Even if the dispute is resolved in your favor, the mere fact of a chargeback, which was initiated, is going too held against you? Visa and MasterCard holds the credit card payment processing companies accountable for their merchants' chargebacks. If a card member generates chargebacks in excess of 1% of its total transaction amount then the card processor is assessed a fine.

A merchant should always review its monthly credit card volume as well as cash receipts from its customers during the past six months. It is unusual for a business to experience recurring variations in their monthly receipts, and these fluctuations are generally acceptable in calculating the probable for a business cash advance.

No business is invulnerable against chargebacks; even manual credit card processing merchants can have a chargeback every now and then. Yet, most vulnerable are those businesses that operate in a card-not-present environment. Direct marketing and PC based credit card processing merchants need to make them acquainted with the chargeback tactic and implement in their sales process a set of best practices to help diminish the impending of customer disputes. This way they will ensure that their processing rates are the lowest possible and will not have to worry about the status of their merchant account.

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