Chargeback is popular to merchants who accept credit cards from customers. A chargeback happens when a customer requests a credit card company to do a transaction reversal. Both the merchant’s bank and the bank that gave the credit card also referred to as the issuing bank have to review the claim before forwarding to the merchant.
The merchant will have an opportunity to dispute the chargeback. This process can take up to six months. This article exclusively goes through the process of disputing a chargeback.
Preparing to Dispute A Chargeback
A chargeback starts when a customer asks the issuing bank to reverse a credit card payment to you as the merchant. Some of the reasons that can make a customer request for a chargeback include unauthorized purchases made by another person who is not the owner of the credit card, incidents in which an online order did not arrive or getting duplicate charges for a single purchase.
The issuing bank will then look into the claim to find out whether it is valid. If it finds the claim to be valid, the issuing bank will take away the charges from the customer’s statement then frontward the claim to the merchant’s bank. After the merchant’s bank gets the dispute notice, they start reviewing it. The bank will contact you in case they need additional information.
Review of The Reason Code
The merchant’s bank after reviewing the dispute forwards a dispute notice to you. This is to inquire for more information about the transaction from you.
The dispute notice contains the reason code which you need to check. Different types of chargebacks have different reason codes. For example, Visa uses 30 as the reason code for merchandise not received or services not provided.
It is essential that you keep the records of your business transactions as much as you can because they serve as chargeback help. These include records of a customer swiping his or her credit card and signing receipts. For online businesses, you need to keep electronic transactions records including customer emails. This way, you will be able to check on your files and see whether the dispute is right or wrong.
Resolving Dispute with Customer
You can try and fix the dispute with the customer by contacting them. Listen to the customer’s side of the story and propose a solution. Such as shipment replacement or refund.
If you reach an agreement with the customer to drop the dispute, ask the customer to contact the issuing bank. This way the bank will drop the chargeback. In case the customer does not corporate with solving the dispute, respond to the bank by sending an evidence letter.
Disputing A Chargeback Through the Bank
Write a letter to your bank with evidence of the disputed chargeback. The letter should be addressed to ‘whom it may concern’ stating that you dispute the chargeback.
Your bank will then forward it to the issuing bank. After you have sent the letter together with the evidence, wait for the result of their review from the issuing bank.
If the issuing bank is persuaded that the customer claim is not valid, they will post the charge in the customer statement. Contrary, if they are not convinced, you will be charged a chargeback fee of about fifty US dollars. Even after losing a chargeback dispute you can still use arbitration through a neutral third party. You might also consider suing the customer in a civil court.