POSitive Processing Blog
The Basics of Chargebacks
Thursday, December 21, 2017
No business owner likes to talk about them, but they happen to everyone — chargebacks. Simply put, a “chargeback” provides an issuer with a way to return a disputed transaction.
Copy requests and chargebacks
When a cardholder disputes a transaction, the issuer may request the cardholder to provide a written explanation of the problem and the acquirer (merchant bank) to provide a copy of the related sales transaction receipt. This is called a copy request (or retrieval request), and if you receive one, it’s very important to provide the information being requested.
After receiving this documentation, the next step is to determine whether a chargeback situation exists. In the case of chargeback the dollar value (financial liability) of a transaction is reversed. For merchants, this can be particularly costly, as you may lose both the dollar amount of the transaction and the related merchandise.
What triggers a chargeback?
Chargebacks arise for many reasons, including customer disputes, authorization issues and unfulfilled copy requests. Many chargebacks arise from easily avoidable mistakes and omissions — so the more you know about proper procedures, the better. Of course, chargebacks are not always the result of something merchants did or did not do; sometimes errors are made by acquirers, card issuers and cardholders.
Most chargebacks begin when a cardholder reports a problem to their card issuer. Here’s a quick look of the lifecycle of a chargeback in a customer-initiated dispute situation.
OMEGA Processing’s customer service will reach out to our merchants when we receive notice of a pending chargeback to help resolve the issue.
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