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Credit Card Chargebacks: Merchants’ Rights

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Merchants may not like the word “chargeback” because of its implications towards their business but it also offers several benefits to them.

It is no surprise why chargebacks are not the merchants’ favorites considering that these are often weighed against them. However, chargebacks are not only created to protect consumers but also to secure the merchants’ rights.

Because a chargeback can be detrimental to a company, it is best to know and understand your merchant’s credit card chargeback rights.

Dispute Resolution Before Resorting to Chargeback

A customer needs to communicate with the merchant first for a resolution before he/she can file a chargeback. A customer must resolve the issue directly with the merchant.

If both parties are unable to come up with an agreement, then the customer must prove to the merchant provider upon filing the chargeback that attempts for resolution were initiated like email correspondence or chat messages. Only then the issuer will accept the chargeback.

Limited Chargeback Amount

A bank can issue the full transaction amount, partial, or multiple partial chargebacks. However, the total chargeback amount cannot exceed the original amount of the transaction. But in some cases, shipping fees, handling fees, and surcharges are may be included in the total chargeback amount.

Customers Cannot Just Return Items And File Chargebacks

The customer cannot just return an item then files a chargeback. If a customer is unhappy to receive an item past the expected delivery date, he/she must attempt a return first before filing a chargeback.

The issuing bank will then wait for 15 days from the return date before processing a chargeback. The 15 days is a grace period for the merchant to process a refund. Doing so will also prevent the customer from receiving a double refund, that is from the merchant and bank.

Allowed Chargeback Period

Customers can only file chargebacks within a specified time frame. Generally, chargebacks are only accepted between 60 days and 120 days. But this may vary as in the United Kingdom customers have up to years and 5 years in Scotland.

Payment Options

Merchants have the right to offer alternative payment methods to avoid chargebacks. However, not accepting credit card payments will significantly affect your customer experience and sales.

Product Return Request

If a customer files a chargeback, a merchant has the right to ask the customer to return the product.

Fraud Prevention Solution

When an e-commerce merchant has experienced multiple chargebacks and financial losses, the merchant has the right to come up with fraud prevention protection to attain near-zero incidents.

A robust fraud prevention system will help chargebacks from happening.

Representment

A merchant has a high chance of defending a fraudulent chargeback dispute by collecting data and evidence that can be used to rule a favorable decision.

By presenting this compelling evidence and disputing chargebacks, it will send a strong message to fraudsters that such acts are not tolerated and unacceptable.

Chargebacks are inevitable but should not compel you from doing business. Instead, you should take advantage of your credit card chargebacks merchants’ rights.

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Linda Barbara

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