What is Second Presentment & Why Does It Matter?
So, let’s assume you’re conducting an eCommerce transaction: you’ve received an authorization code, processed the customer’s payment, completed the sale, and shipped the merchandise. You’d probably expect the transaction to be done, right? Well, sometimes you need to submit a second presentment before you can really put a transaction to bed.
Transaction Presentment: Explained
Any formal presentation of information by one party to another, such as a complaint, indictment, or bill of exchange. In the case of eCommerce, presentment refers to the presentation of transaction data to a bank by a merchant, so the bank may process the transaction.
As a merchant, you’re providing the bank with an official financial claim showing that you provided service and were authorized to receive payment by the customer. The issuer then accepts the transaction information and debits the customer’s account.
As mentioned above, not all presentments are final; the customer might come back later and dispute this first presentment with a chargeback. There are plenty of legitimate reasons why a customer—or the customer’s issuing bank—might do this:
- The customer did not authorize the transaction.
- The good or service provided did not reflect what was promised.
- The item was paid for, but never shipped.
- The customer was charged multiple times for the same purchase.
- The merchant committed a processing error.
Those are just a few examples. If any of these circumstances apply, you might not have much choice other than accept the chargeback and lose the funds from the sale. That doesn’t mean you should assume every dispute is legitimate, though.
Our research shows that upwards of 80% of chargebacks are friendly fraud, meaning you can probably fight—and win—most of your disputes. If you’re confident that a transaction was legitimate, then you will need to challenge it. That means submitting a second presentment.
Evidence & Context Are the Keys
When you submit a second presentment, you’re challenging the reason why the initial transaction was disputed.
If the dispute involves a Visa card, then you will be working through the Visa Claims Resolution process. VCR sorts transactions into two workflows to automatically assign liability where it belongs wherever possible. For a Mastercard chargeback, though, all disputes will go into a single workflow through at least the beginning of 2019.
You will need to submit a second presentment for any transactions not automatically resolved by automation. This is often referred to as representment because you are literally “re-presenting” the transaction to the issuer. However, you can’t just submit the same information you provided the first time.
There are two added components necessary for a successful second presentment:
This covers any supplementary documents or information that could help prove a transaction or disprove any inaccurate claims. This is an open-ended requirement, but popular options include delivery confirmation receipts, signed shipping orders and sales receipts, or even photographic evidence of the item’s delivery.
A chargeback rebuttal letter is the written documentation that provides context to the collected evidence. You will need to clearly explain the evidence you’ve provided, and why you think the original transaction should not have been disputed.
You need both components. If either is missing, you’re essentially re-submitting the same transaction twice…which will almost certainly result in the chargeback being upheld.
Once you submit your case, the issuer will review the available evidence against the cardholder’s claim, and return a verdict. The issuer can either overturn the chargeback and allow the charge to go ahead as intended, or it can uphold the chargeback and return your funds to the cardholder.
Tricks & Tips to Improve Your Odds
Remember that speed matters. Every day a dispute remains open, that’s a day that your revenue remains stuck in limbo. You want to resolve the issue as quickly as possible so that you can put that revenue to work and keep growing your business.
Now that you know what a second representment is, here are some additional tricks, tips, and general advice that will help you maximize your efforts and make your second presentment a winner:
As they say, the best offense is a good defense. You need to monitor your transactions closely and know how to deploy measures to prevent chargebacks. Our data shows anywhere between 20-40% of all disputes could be prevented if merchants adopt the right strategies and take a proactive approach to chargeback management.
Many disputes are outside of your control. When they occur, you need to be ready to respond in a timely manner. Under Visa Claims Resolution, some of your transaction data will always need to be accessible in the VROL system for instantaneous resolution. Other pertinent data should be carefully organized and protected so you can access it whenever needed. This is especially relevant in a post-GDPR environment.
Dig Deeper than the Reason Code
Each case is typically assigned a chargeback reason code to explain why it’s been disputed. However, reason codes are unreliable; often, the reason code is used to disguise friendly fraud, and you’ll end up deploying the wrong solution as a result. You need a diagnostic tool—like our Intelligent Source Detection™ technology—to identify the true cause of each dispute.
Analyze Your Disputes
Do you know your chargeback win rate? If not, how can you gauge whether your current approach is effective? You need to have access to an incredible range of pre- and post-transactional data to really identify pain points and judge if your strategy is working. Concise data will allow you to adjust where necessary for the greatest effect.
Don’t Forget Human Oversight
Automated technologies can be very helpful, but remember that chargebacks are a dynamic problem. If you rely on automation alone, then you will lose quite a few disputes you should have won. You need human oversight with each case to prevent loss and identify potential opportunities.
Submitting a second presentment is part of a complicated, litigation-based process, and if you’re not an expert on the subject, the chances of success can be low. Rather than investing time, staff, and resources in assembling cases, many businesses choose to consult with experts, or even outsource the entire process (more on that here).
Even in a Best-Case Scenario…the Odds are Steep.
As revealed in our State of Chargebacks 2018 report, only three in ten merchants who submit a second presentment on their own have a win rate higher than 30%.
If your second presentment is rejected, you will have only two options left:
1. Accept the Chargeback:
Give up and allow the chargeback to go ahead as filed.
Appeal the dispute to the card scheme, and hope they rule in your favor.
Chargeback arbitration can be even more complicated than your second presentment, and you have no insight into the process. Plus, there are significant fees involved. You may be required to pay:
- Filing Fee
- Administrative Fee
- Withdrawal Fee
- Technical Fee
These fees are anywhere between $100 and $250 each, making arbitration an incredibly expensive process per transaction, and there’s no guarantee of success. You will still lose your revenue and merchandise if you lose in arbitration, AND you will pay the added fees.
When it comes to second presentment, you want to do it right the first time. Click below and learn how to get started with the industry’s most successful chargeback-fighting strategy and see long-term, sustained chargeback reduction.