What is a chargeback and how will I know if I received one?

What is a chargeback and how will I know if I received one?

What is a chargeback?
  • A chargeback occurs after customers contact their card issuer and dispute a transaction(s) on their credit card statement. This dispute notifies the customer's card issuer/bank about which transactions they believe are fraudulent or erroneous and whether or not the card was in their possession or lost or stolen.
  • Because it is a dispute initiated by your customer and their bank, CoCard Businesses knowledge and ability to assist with the situation are limited.
 
How will I know if a customer issues a chargeback for a transaction made at my business?
  • You will always receive correspondence in the mail regarding a chargeback.
  • The letter sent via mail will include instructions regarding dispute options for your business and the next steps you will need to take.
  • You can contact the chargeback department by calling the appropriate number listed on the chargeback letter. Any documentation sent to the chargeback department must include the case number listed in the notice. 
    • Please note that CoCard Business will not see or have any insight on what was included in the letter notifying you of a chargeback. 
    • CoCard Business will be able to provide insight regarding specific details of the transaction in dispute, such as last the four numbers of CC used during the sale, the payment method, date + time of the transaction, and the history of the customer's card (if applicable) with your business.
 
Important Chargeback Notes
  1. Chargebacks follow strict Visa/MasterCard/Discover/American Express guidelines and carries a $25 per occurrence fee.
  • Chargebacks are monitored by Visa/MC/Disc/Amex and can impact your ability to accept credit cards in the future. Processing banks and credit card associations see high chargeback rates as proof of a business’s inability to work with customers and are considered high-risk.
  • You can ship merchandise or deliver a service and still lose the value of the sale. Your customer can win a chargeback in many different circumstances. In particular, chargebacks in a card-not-present environment often favor the customer.
 
Steps to Reduce Chargebacks at your Business
  • Respond to all customer complaints. By resolving a dispute before the customer calls their bank, you can save yourself a lot of effort by resolving the issue proactively.
  • Offer a refund if you feel the customer may win a chargeback dispute. It may be cheaper to offer the customer a refund than to lose a chargeback dispute initiated by your customer. 
  • If you’re processing in a card-present environment, always capture a signed receipt with a full description of goods sold or services rendered. These will prove valuable in the chargeback arbitration process and may tip the scales in your favor.
  • If you’re processing in a card-not-present environment, always check for fraud. Set your AVS and CVV filters, your Daily Velocity filters, and your Transaction Limit filters. These can save you a lot of headaches down the road.
 
What is a Retrieval?
  • A retrieval occurs when a customer’s issuing bank formally requests specific information from you, the merchant, or us, the acquiring bank (CoCard). Retrievals are $25 each. 
  • They’re relatively rare but often will come in the form of an invoice request or a copy of a signed receipt. When requested, it’s essential to act quickly and provide the requested documentation. That way, the issuing bank can verify the validity of the sale, and you can potentially avoid a chargeback.
 
Helpful Chargeback Resources for Business Owners

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