Chargeback Management

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Chargeback Processing

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Chargeback Processing Time Frames, Fees & Documents: The Merchant’s Guide

Chargeback processing is a complex topic. As a merchant, how do you stay up-to-date on industry standards and time frames? What about the fees and all the necessary documents to process a dispute? Not to worry: we’ve got the answers.

In this post, we’ll give you a quick rundown of what you need to know about chargeback processing from a merchant standpoint. We’ll offer a little insight on how banks handle chargebacks. Finally, we'll explore how you can streamline some of your operations to reduce costs and recover revenue.

Chargeback Processing Cycles & Time Frames: Cardholder & Issuer

To understand chargeback processing, it helps to know a little about how the process works.

The chargeback life cycle generally begins when the cardholder files a complaint about a transaction. An issuer may also submit a bank chargeback if they detect an internal problem with the transaction, such an authorization error. However, this is less common.

The time frame in which cardholders can file chargebacks varies based on the cardholder’s claim. The brand of the credit or debit card can be a factor, too. For most Mastercard and Visa transactions, though, the cardholder has 120 days from the date of purchase in which to dispute a charge.

When a cardholder disputes a chargeback, the issuer starts by investigating the cardholder’s claim. If the claim seems valid, the issuer files a chargeback and forwards it to the acquirer.

Chargeback Processing Cycles & Time Frames: Acquirer & Merchant

After the issuer forwards the chargeback to your acquiring bank, the acquirer will review the case and determine what to do next. In rare cases, the acquirer might write-off the transaction. Generally, though, the acquirer will debit the funds from your account and forward you the chargeback documentation.

A Chargeback Debit Advice Letter usually accompanies the case information. This letter offers instructions on how to respond to the chargeback. Note, however, that the acquirer often mails this package on the same day they debit your account. Unless you closely follow the numbers in your merchant account, you may receive the letter before you notice the funds are missing.

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Once you receive the chargeback documentation, you can decide if you want to accept the dispute. If you feel the claim is invalid, you could fight back through representment.

If you choose to fight the chargeback, there will be a tight deadline for your response. You must respond within 30 days of the central site business date (CSBD). In other words, 30 days from the day the issuer submitted the chargeback; not from the day you received it. In practical terms, this often leaves little more than 10 days for you to investigate the claim, gather evidence, draft a response, and submit your documentation.

Chargeback Process

What Documentation Do I Need to Fight a Chargeback?

As mentioned above, you can fight chargebacks through representment. Banks need strong evidence to create a reasonable doubt about the consumer’s case, though. The stronger the evidence, the better the odds that the bank will reverse the chargeback.

The documents you need will vary based on the reason code attached to the chargeback. The foundation of your case is compelling evidence. This evidence is essential if you want the issuer to reconsider the initial chargeback processing. Common examples of compelling evidence include:

  • Delivery confirmation receipts
  • Tracking information
  • Signed orders or contracts
  • Sales receipts
  • Transcripts of any communications you have with the buyer
  • Photographs of the cardholder with the product

These are just a few examples. You should tailor the evidence you select to the specifics of the cardholder’s claim, based on the accompanying reason code. Even if the reason code does not apply to the actual issue—which is often the case—you still need to reply to the underlying claim.

You also need to include a chargeback rebuttal letter with your submission. This is a succinct summary of your case, explaining your evidence and why it invalidates the cardholder’s claim. In some instances, you may also need to include a Chargeback Adjustment Reversal Request. Check out our complete chargeback rebuttal letter guide for more information on these documents.

What About Chargeback Processing Fees?

Unfortunately, even if you fight a chargeback, you will still be responsible for chargeback processing fees.

The final amount of a chargeback fee varies, depending on the circumstances. Your acquiring bank has a voice in determining the amount, as does the processer. The type of goods or services you offer can also affect the price tag.

On average, the fee for a single chargeback falls somewhere around $20. If you’re labeled a “high risk,” though, you can expect to pay much more per chargeback. Merchants at the “Excessive” tier of the Visa Dispute Monitoring Program, for example, must pay at least $50 for every dispute filed against them. That’s not accounting for any extra fees that the acquirer might tack on to cover their costs, too.

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To make matters worse, chargeback processing fees are not refundable. These fees are meant to cover the costs borne by the banks. So, even if you overturn a cardholder dispute through representment, the bank will keep the fee they collected to offset their expenses.

These chargeback processing fees add up quickly. In 2020, merchants lost a total of $3.36 for every $1 in direct chargeback costs, when accounting for merchandise, fees, and overhead.

Streamline Your Chargeback Management

Chargeback processing can be a confusing process. At every level, though, you’ll find opportunities to reduce costs and recover revenue.

Many potentially reversible chargebacks might go unchallenged because you couldn’t respond within the timeline imposed by the card network. In other cases, you might submit a response, but still not have the chargeback overturned because you couldn’t identify the most compelling evidence. A streamlined chargeback processing approach could address both these issues. The key is to be organized and have a process in place to quickly manage disputes.

You need to be able to retrieve important documents at a moment’s notice. Building out a detailed, organized, and secure system for storing transaction information is the best thing you can do to help prepare for disputes.

Looking beyond reason codes to identify chargeback sources, plus understanding and gathering the compelling evidence necessary to fight those chargebacks, demands a strategy based in human forensic expertise and machine learning technology. At Chargebacks911, we offer the industry’s only end-to-end chargeback management service. Need help with the ins and outs of chargeback processing? Save time and revenue by giving Chargebacks911 a call.


What are Chargeback Processing Fees?

Chargeback processing fees are meant to cover the chargeback costs borne by the banks. The final amount of a chargeback fee varies. On average, though, the fee for a single chargeback falls somewhere around $20 and $50.

What is the Chargeback Processing Cycle?

Chargebacks are initiated by cardholders, in most cases. The issuing bank then reviews the case and forwards it to the acquirer. The acquirer does its own review, debits the merchant’s account, and forwards the chargeback documentation to the merchant. The merchant can then choose to accept the loss or fight it through the representment process.

What is the Chargeback Processing Time Frame?

Chargeback time frames vary based on the reason code. However, for the majority of claims, the cardholder has 120 days after the initial transaction to file a chargeback. The merchant, however, may have less than 30 days from the central site business date. This could mean the merchant has only a week or so to compile their case.

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