Chargeback Policies of Credit Card Processing Companies

The credit card processing companies monitor the number of disputes and chargebacks at all of their merchants and locations. If the number of disputes and / or chargebacks at a merchant or location is considered excessive, they may take action to limit their exposure.

Credit card processing companies typically chargeback by deducting, withholding, recouping from, or otherwise offsetting against their payments to a merchant or debiting the retailer's bank account, or they may inform the merchant account user of its obligation to pay them, which it is required to do immediately and fully.

Chargeback Reasons

The most typical reasons for chargebacks include:

• A refund has not been issued when the customer expected it would be.
• Merchandise that was ordered was never received.
• A service was not provided as expected.
• The customer did not participate in the purchase, which was fraudulent.
• Missing or questionable customer signature.
• Transaction was processed after the authorization request was declined.
• Expired card.
• Processing errors.

Chargeback Programs

Chargebacks can be initiated because the retailer is in one of the chargeback programs listed below. The credit card processing companies can place the retailer in any of these programs upon signing the merchant agreement, or at any time during its term.

• Immediate chargeback program.
• Partial immediate chargeback program.
• Fraud full recourse program.

Chargeback Reversals

Merchants can request a chargeback reversal if it was applied in error. In order for the credit card processing companies to consider the request, the retailer is required to:

• Have responded to the original information inquiry within the specified time frame.
• Request the chargeback reversal within twenty days from the date of the chargeback, and
• Provide all relevant supporting documentation to substantiate the error.

If the chargeback is applied under any of the above mentioned chargeback programs,the chargeback reversal may only be requested if the retailer proves that a refund was already issued to the customer for the amount of the disputed sale.

How to Receive Inquiries and Chargebacks

The credit card companies have a wide array of options for the exchange of transaction information with retailers. In addition to the old-fashioned paper by mail method, retailers could be able to receive and reply to information inquiries and chargebacks using various web-based tools, which are usually issuers' preferred method of handling customer disputes and chargebacks.

How to Respond to Chargebacks

Merchants can respond to information inquiries via online tools, fax and mail depending on how they receive the copy request.