October 16, 2023
In the fast-paced world of e-commerce, understanding the intricate chargeback process is crucial for merchants. Chargebacks can impact a business's revenue, reputation, and overall success. To effectively manage and prevent chargebacks, you need to grasp each step of the process, from the initial alerts to thorough tracking.
Every chargeback begins with an alert—a notification from the cardholder's issuing bank. These alerts typically signify that a cardholder disputes a particular transaction, raising concerns about its legitimacy.
Chargeback alerts can be triggered for various reasons, including:
After receiving an alert, the cardholder's bank reviews the claim and assigns a reason code to the case. The reason code provides a brief explanation of why the cardholder disputes the transaction, such as fraud, service dissatisfaction, or an unauthorized purchase.
During this phase, the issuing bank investigates the cardholder's claim and determines whether it's valid or not. If the bank finds the claim unwarranted, the dispute will be voided.
Once the issuing bank finishes its investigation, the merchant enters the scene. Merchants receive a chargeback notification and the accompanying reason code. They must review the chargeback to decide the best course of action.
Merchants have several options:
The issuing bank takes into account any evidence provided by the merchant to make a final decision. If the merchant's evidence successfully refutes the cardholder's claim, the funds withheld during the chargeback process will be returned to the merchant. However, any chargeback fees or administrative costs will not be repaid.
Should the merchant's evidence fail to disprove the cardholder's claim, the transaction amount permanently shifts from the merchant to the cardholder, and the chargeback remains in effect.
By monitoring and tracking chargeback alerts, merchants can gain valuable insights into their business operations. Chargeback alerts are not just a financial liability; they are also a source of data that can reveal patterns and issues that require attention.
Tracking chargebacks is essential for several reasons:
Chargeback Hero (CBH) provides e-commerce businesses with the expertise and innovative solutions needed to tackle chargebacks effectively. By combining technology, data analysis, and industry knowledge, CBH helps merchants prevent chargebacks and minimize their financial impact.
In a world where chargebacks can make or break an e-commerce business, understanding the entire chargeback process is invaluable. By staying alert to alerts and tracking the path from dispute to resolution, merchants can take proactive steps to protect their revenue and reputation.