How merchants should fight chargebacks (2024)

FAQs

How merchants should fight chargebacks? ›

The merchant must then decide whether to accept or fight the chargeback. If the merchant chooses to fight the chargeback, they must submit a rebuttal letter and supporting evidence to prove that the dispute is invalid. The issuing bank will evaluate this evidence and decide whether to reverse or uphold the chargeback.

When a cardholder disputes a transaction, the bank initiates a chargeback and contacts the merchant providing a reason code for the dispute. The merchant then has the option to either accept the dispute and the associated losses or fight the chargeback by providing evidence that the transaction was valid.

In addition to losing the funds from a sale, a business may have to pay its payment processor a chargeback fee to cover administrative costs of resolving the dispute. These fees range from about $15 to $50 per transaction, but they may reach up to $100 or more, depending on the payment processor.

Compelling evidence: If you have strong compelling evidence that shows the customer's dispute is unwarranted, then you have a good chance of winning the chargeback dispute and keeping the sales revenue (because the consumer won't receive the chargeback refund).

If asking the merchant for a refund didn't work, request a chargeback with your credit card issuer. Many card issuers let you dispute transactions by phone, mail or online. You may also be able to submit a dispute directly through your card issuer's mobile app.

Try to collect all your interactions with the customer to help disprove the chargeback claim. For instance, if the cardholder claims they didn't take part in a transaction, you could provide: evidence of their previous undisputed purchases. proof of delivery at the cardholder's address.

Start by trying to get in touch with the customer. If you can resolve the problem with the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence to the credit card company that the customer agreed to drop the charge.

Bill or invoice. Communication with the customer (if available). Signed receipts. Proof of guest acknowledging the terms and conditions (T&Cs) of the property.

Who decides who wins a chargeback? ›

The issuing bank will evaluate this evidence and decide whether to reverse or uphold the chargeback. If the bank decides against the merchant, the merchant can appeal through arbitration, at which point the card network steps in to decide the case.

Compelling evidence is documents that a merchant submits with a chargeback response to prove the transaction is valid or otherwise contradict the chargeback. Each chargeback has a reason code. The reason code determines which forms of compelling evidence the merchant should submit with the chargeback response.

Merchant chargeback prevention services

Fraud protection providers and some payment processors offer chargeback prevention services, a kind of chargeback protection shield. Chargebacks are mostly prevented by declining risky orders or through improved customer service.

Chargebacks are particularly detrimental because they directly affect a company's bottom line. The financial implications extend beyond the transaction value, including fees, administrative costs, and potential penalties.

A chargeback reversal is the acknowledgment by an issuing bank that a transaction was valid, and that the cardholder's chargeback claim was invalid. When a merchant wins a chargeback reversal, the bank will return the funds being disputed.

Yes, merchants can take cardholders to court for chargebacks, particularly if they believe the chargeback was fraudulent or unjustified. To do this, the merchant would file a lawsuit in small claims court, seeking to recover the funds that were charged back, plus any additional damages or costs incurred.

An effective representment strategy typically results in a win rate between 65% and 75%, but some merchants would feel lucky to reach even half that. To help out, let's go over four basic tips merchants can use to get more chargeback reversals.