A credit card chargeback occurs when a customer disputes a credit card processing transaction. The chargeback process increases customer confidence. When a customer wants to dispute a charge, it is a very simple process. However, banks and merchants have to handle all the tough issues, such as determining if the transaction is not fraud. Because of this, business owners must understand how to handle a chargeback successful.
The Credit Card Processing Chargeback Process
After a customer disputes a chargeback, the bank moves the transaction back to the merchant’s bank. The account of the cardholder is credited the amount of the transaction. The funds in question will be withheld until the issue is solved.
Various acquiring banks use different procedures when handling chargebacks. Although each method is specific, they are governed by the card brand. All the details needed to handle a chargeback is generally given to merchants by acquiring banks. Merchants must use these procedures efficiently.
Another important thing that must be considered is that a customer’s bank will refund the disputed amount fast. The customer gains those funds as soon as the chargeback is disputed. The refund process should not be handled by merchants on their own.
Disputed transactions will be deducted by acquiring banks from merchant accounts. When this occurs, the merchant must either plead the case or accept the chargeback. Most of the time, the merchant will present evidence that has details about if the transaction in question is legit. The evidence must have details about why the customer disputed a chargeback. If the evidences have details that convinces the acquiring bank that the transaction in question is legit, the acquirer will move the transaction to the issuing bank again.
After this point, the issuing bank has many things to consider. The bank may agree with the acquirer. The issuing bank may also reject the dispute of the cardholder or disagree. The merchant can accept the outcome or handle the transaction by using the services of the card association for final arbitration. If card association favors the merchant, the cardholder is billed the amount, and the merchant will get payment. If the card association favors the cardholder, the cardholder will keep the credit that the bank issued, and the merchant will not get paid.
Overall, chargebacks are useful for customers, and merchant accounts offer benefits to companies, but business owners must use the proper procedures to handle chargebacks efficiently to reduce risks.