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Disputing Chargebacks

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What is a Chargeback?

  • A chargeback, also known as a credit card dispute, occurs when a customer asks their card’s issuing bank to reverse a transaction charge. This results in a forced transaction reversal and the merchant’s processing bank being debited.
  • Credit card companies let cardholders dispute credit card charges to protect them from unauthorized charges and fraud.
  • Chargebacks can cause problems for merchants by reversing legitimate charges after the service/product has already been delivered. As well as increasing their chargeback ratio which can affect the relationship with their processing bank.

Disputing Charges

  • When a customer initiates a chargeback on a transaction, your processing bank will conduct an investigation to decide whether or not to return those funds to the cardholder.
  • The bank will reach out to give you an opportunity to dispute the chargeback. Although some banks are starting to send email notifications, typically banks alert a merchant of a chargeback via the USPS. A merchant is only given a small timeframe to dispute the chargeback and provide the information needed to have the decision go in their favor. Using the USPS method of notification is a slow process which can lead to less time to solve the issue. 

Chargeback Alerts

  • Your Bankful gateway has an alert feature called Chargeback Alerts, which you can activate as long as your merchant account has a merchant identification number (MID) and a descriptor.
    • This information can be obtained from your processing bank.
  • Chargeback Alerts ensure an electronic alert is issued to you when a bank is notified that a chargeback has been initiated. This allows you more time to issue a refund or prepare for the dispute process.
    • Bankful will alert you when a chargeback has been found and allow you to refund it instantly or notify you to review it.
      • Please note smaller banks may not report to the entities that issue alerts.
  •   Please see our guide on Activating Chargeback Alerts as well as our Fraud Shield article.