Most chargebacks begin when a cardholder reports a problem to the card issuer. Here is a quick snapshot of the streamlined Chargeback Life Cycle in a customer-initiated dispute situation.
Note:"Acquirer" refers to the "merchant bank" or merchant's financial institution.
Place your mouse over each step for a brief explanation.
Responding to chargebacks
Some chargebacks can be resolved easily without the merchant having to lose the sale. This can be done by simply providing additional information about the transaction or about specific actions taken regarding the transaction. The key here is to always supply as much information as possible to your acquirer to help them remedy the chargeback. Consider these guidelines to ensure you have a system in place.
- Know your representment rights to avoid unnecessary losses for your business.
- Act promptly when customers with valid disputes deserve credits.
- When cardholders contact you directly to resolve a dispute, issue the credit on a timely basis to avoid unnecessary disputes and their associated chargeback processing costs.
- Let cardholders know immediately of the impending credit.
- Respond to a chargeback as quickly as possible.
- Address all of the cardholder’s pertinent claims.
- Be sure to supply “compelling” information to prove the true cardholder participated in the transaction, received the goods or services, and benefited from the transaction.
Examples of compelling information
- Correspondence between the cardholder and merchant that proves the merchant spoke to the cardholder or received a letter stating that they acknowledge the validity of the transaction.
- Evidence that the merchant swiped or imprinted the card, received an authorization approval, and the cardholder’s signature.
For additional information on compelling information; refer to the Visa International Operating Regulations.