We get asked many questions by new and existing clients each day. In light of that, our team has put together a chargebacks and retrievals FAQ section.
What is a "chargeback?"
Occasionally, a cardholder will dispute a charge that appears on his/her monthly bankcard statement and/or it may be discovered that the proper bank card acceptance and authorization procedures were not followed at the point of sale. If this happens, your bank or processor will notify you of the dispute and debit the amount from your settlement/deposit account. This is called a "chargeback."
I just received a retrieval request, what do I do with it?
You should immediately pull your originating documentation for this transaction and submit it to your credit card processor.
I just received a Notification of Chargeback, what is it and what do I do with it?
A Notification of Chargeback is notification to you that your account was debited for this transaction. You should read the reason for debiting your account on the form, and if it is incorrect you should immediately submit supporting documentation and the Notification of Chargeback to your processor. If the issuing bank accepts your documentation, the chargeback will be reversed and the amount of the disputed transaction will be credited to your account. This credit is conditional. If the cardholder disputes the reversal a second chargeback may be initiated. In addition, if your processor has information to contradict your claim, or if your documentation does not support your case, the chargeback debit to your account will stand.
Why couldn’t this Chargeback be taken out of my reserve account instead of my regular checking account?
A reserve is set up for security purposes to protect the merchant account processor from losses due to chargebacks. The reserve is usually for merchants who accept non-face-to-face transactions, (phone, mail and Internet orders). The reserve is held in case of default by a merchant.
When will I be notified of a chargeback and when are funds removed from my checking account?
The processor will usually mail a Notification of Chargeback when the debit is transmitted to your bank. It takes 2-3 business days for this debit to reach your checking account. Most often, you will receive notification at the same time your checking account is debited. With the optionalservice, chargebacks can be identified the following day.
Why did I get a chargeback without a prior retrieval request?
When I signed my processing agreement I thought I would be given an opportunity to answer a dispute before it was charged to my account.
Not all of MasterCard’s and VISA’s chargeback reasons require the Issuer (cardholder's bank) to generate a retrieval request before initiating a chargeback.
Why is my account charged for these transactions?
When the issuing bank initiates the chargeback they charge your bank account.
Why didn't anybody tell me about chargebacks before I signed my processing agreement?
Your sales representative was responsible for informing you about chargebacks. However, the information is also included on your Merchant BankCard Agreement. For more information, please see our Introduction to Merchant Services.
How much do chargebacks and retrievals cost me?
You can expect to pay anywhere from $20 - $50 / chargeback. This fee is to cover expenses with processing. To reverse a chargeback, when it's possible, costs you nothing.
Is the risk of chargeback greater if I manually enter the credit card number?
If you are a general retail merchant where a card is present but do not get an imprint (manual or electronic), you may lose money through a chargeback when the cardholder disputes the transaction.
Why did ECHO allow the customer to take their money back?
This decision was made by the Issuing Bank upon reviewing the letter of dispute sent to them. This does not mean that this decision is final or you have no rights to rebut their chargeback. Work with your processor to dispute chargebacks if there are valid reasons for doing so.
Who is going to pay for my bounced check fees because this chargeback was taken from my account?
Per the merchant’s contract with the processor the merchant should keep enough money in his account to cover any chargebacks.
I issued a credit and I still received a chargeback, why?
In these cases for some reason the Issuer did not see the credit issued by the merchant. Sometimes the credit is issued after the chargeback was initiated and they ‘cross’. All you have to do is represent the item and it will be credited to your account.
I was told that an authorization guaranteed payment.
An authorization will only verify that an account is open and that there are funds available. However, if a card has been stolen and the loss has not yet been reported, any charges made by the criminal can later be charged back by the cardholder.
Can a credit card processor protect me from chargebacks?
You are financially responsible for all chargebacks that occur on your account. Chargebacks are typically the result of either customer dissatisfaction or fraud. Most chargebacks begin when the cardholder contacts their bank (the bank that issued the card) to dispute a transaction. At this point, the issuing bank sends a retrieval request or chargeback to the acquiring bank who works with the merchant to, if possible, respond to the retrieval request or dispute the chargeback.
A retrieval request is a request from the issuing bank to receive a copy of the transaction information, including the merchant receipt for the given transaction. When used, retrieval requests precede chargebacks; however, most chargebacks do not require a preceding retrieval request.
Have any additional chargebacks and retrievals FAQ that we may have missed? Feel free to email them to us at firstname.lastname@example.org and we'll get back to you.
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