What Makes Discover Card Chargebacks Different From Other Disputes?
Transactions using a Discover credit card are the same as a Visa or Mastercard transaction in many ways. However, there is a key difference between these card networks: unlike Visa and Mastercard, Discover functions as both an issuing bank and a card network.
The company does partner with select financial institutions. But, by operating as both the card network and the bank, the company can issue its own branded cards directly to customers (or “card members”) without relying on third-party issuers. Thus, most transactions processed via the Discover Network involve cards issued by Discover Bank.
When it comes to Discover Card chargebacks, there’s a good chance you’ll be dealing directly with Discover Bank. So, with that in mind, let’s take a closer look at how Discover chargebacks differ from those received from other major card brands.
Why is Discover Different?
Before digging in, it’s helpful to understand why Discover is different from other card brands.
If we look at Visa and Mastercard, we find that both brands are interbank networks. They were built on an extensive association of issuing and acquiring banks that interact with cardholders. The network is the medium through many different member banks can interact. Discover and American Express, on the other hand, are banks that build, and continue to manage, their own proprietary card networks.
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The first Discover cards were issued by the Greenwood Trust Company as part of an initiative launched by the Dean Witter Reynolds Organization in 1986. Dean Witter Reynolds was owned by Sears, Roebuck & Company, the largest retailer in the US at the time.
Unlike earlier, failed attempts to challenge Visa and Mastercard’s domination of the credit card industry, the Discover card proved to be an instant hit with consumers. Discover charged no annual fee, offered higher credit limits, and introduced a cash-back earning scheme. All of these offerings were uncommon at the time. Merchants also embraced Discover, attracted by merchant fees that were considerably lower than those offered by competitors.
Discover Card Chargeback Process
Like other card networks, Discover has a process for handling chargebacks. It starts when a card member contacts Discover with a complaint. As for the Discover card chargeback time limit, card members typically have 120 days from the transaction date to dispute a transaction.
Since the company acts as both the issuer and card network, they already have an abundance of transaction information available for review. So, at that point, one of two things happen:
- Discover decides the customer’s claim is legitimate and issues a chargeback.
- Discover sends a Ticket Retrieval Request to gather more information about the case.
Even without additional evidence, ignoring the retrieval request is a bad idea. If they don’t hear from you, the claim will be escalated to a chargeback. The network will assess additional fees as a result.
There’s one more important difference between Discover and the other major card networks to know about. Visa and Mastercard require you to attempt to resolve the matter directly with the cardholder. Discover, however, prohibits any contact between yourself and the card member regarding a Discover card chargeback.
Discover Chargebacks & Representment
Discover will issue an immediate chargeback if they feel the cardholder’s claim is valid. But, even if you did not respond to the retrieval request within the allowable timeframe, you can still challenge the claim if you believe it’s illegitimate.
Discover provides a dashboard called the Discover Network Dispute System. This tool is designed to aid in dispute resolution. Through it, authorized users can look up transaction and cardholder details, along with other data for each dispute. It also you to upload evidence to fight a Discover chargeback.
Merchants officially have 20 days to respond to Discover card chargebacks. However, your processor may require documents sooner than what’s stated in the rules. If you provide a response before the deadline, with enough evidence to support the original charge, it may stop the chargeback. If the response is late or does not include sufficient supporting evidence, the chargeback will proceed, and you will lose the funds permanently.
The odds of getting a Discover chargeback overturned are limited. It can happen under the right circumstances, though. For example, you could successfully dispute a chargeback if there were mistakes in the processing of the transaction, or if you can prove you issued a refund before the dispute. Winning a reversal does not necessarily mean the dispute is completely resolved.
How Discover Chargebacks Differ From Other Brands
If Discover is the card issuer, their decision on the representment is usually the last word. The arbitration processes available under Visa and Mastercard are not available here; because Discover is both the card network and the issuer, this would be redundant. Other issuers will have 30 calendar days to examine the documents and accept or reject the claim. Finally, after being notified of the appeal, you’ll have 20 days to submit additional evidence to support your case.
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The evidence you need can vary depending on the cardholder’s claim. Discover publishes minimal information concerning evidence, compared to the other major card networks. When you receive notice of a dispute, however, it should include a list of documents that will be required to overturn the dispute.
Like the other card networks, Discover assigns a reason code to each chargeback that shows the given cause for the card member’s claim. For more information on these indicators, check out our full article on Discover reason codes.
Being familiar with these codes will help. You must keep in mind, though: the reason code seldom gives the full story behind the chargeback.
The Importance of Discover Chargeback Prevention
Yes, it’s possible to win a reversal on a Discover chargeback. However, the best strategy is still to prevent them from happening in the first place.
One of the most important parts of chargeback prevention is clear communication with the customer. For example:
- Make sure your customer service contact information is prominent and easy to access from multiple locations.
- Share the return or exchange policy and any other terms of service before completing the checkout process.
- For card-not-present transactions, always ask for the Card Identification Number (the four-digit security code on the card face).
- Use the Automated Address Verification service (Discover’s version of AVS) to validate card member information.
- If you must process a credit, do so immediately and let card members know when they will receive the refund. A refund isn’t ideal, but it’s far better than a chargeback.
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How is Discover different from card networks like Visa and Mastercard?
Like American Express, Discover functions not only as a card network, but also as an issuer. By operating as both the card network and the bank, the company can directly issue its own branded cards to customers without relying on third-party issuers.
How long do cardholder have to file a chargeback with Discover?
Cardholders typically have up to 120 calendar days from the date of purchase to file a chargeback.
Are Discover chargebacks different from Visa and Mastercard chargebacks?
Yes. Because the issuer in this case has the bulk of the transaction information already, Discover disputes are typically more straight-forward in their process. For the same reason, however, it can be hard to contest a chargeback on a Discover card.
What is a ticket retrieval request?
Ticket retrieval requests are notifications from Discover requesting more information from you before they rule whether a card member has sufficient cause to file a chargeback.
What are the time limits involved with Discover chargebacks?
You’ll have 5 calendar days to respond to a retrieval request, then 20 days to respond to a chargeback (your processor may require documents sooner). If the reversal is appealed, you’ll have 20 days from the date of the reversal to submit additional documentation.
How long do Discover disputes take?
This varies from one situation to the next. If the Discover card chargeback is a straightforward claim, then it may take just a few days for the money to be returned to the cardholder. If the merchant opts to dispute the claim, though, it could take several weeks, or even months.