Chargebacks and Retrievals
What is a "chargeback?"
Occasionally, a cardholder will dispute a charge that appears on
his/her monthly bankcard statement and/or it may be discovered that
the proper bankcard acceptance and authorization procedures were
not followed at the point of sale. If this happens, your bank or
processor will notify you of the dispute and debit the amount from
your settlement/deposit account. This is called a "chargeback."
I just received a retrieval request, what
do I do with it?
You should immediately pull your originating documentation for this
transaction and fax it to your credit card processor.
I just received a Notification of Chargeback,
what is it and what do I do with it?
A Notification of Chargeback is notification to you that your account
was debited for this transaction. You should read the reason for
debiting your account on the form, and if it is incorrect you should
immediately fax supporting documentation and the Notification of
Chargeback to your processor. If the issuing bank accepts your documentation,
the chargeback will be reversed and the amount of the disputed transaction
will be credited to your account. This credit is conditional. If
the cardholder disputes the reversal a second chargeback may be
initiated. In addition, if your processor has information to contradict
your claim, or if your documentation does not support your case,
the chargeback debit to your account will stand.
Why couldn¡¯t this Chargeback be taken
out of my reserve account instead of my regular checking account?
A reserve is set up for security purposes to protect the merchant
account processor from losses due to chargebacks. The reserve is
usually for merchants who accept non-face-to-face transactions,
(phone, mail and Internet orders). The reserve is held in case of
default by a merchant.
When will I be notified of a chargeback
and when are funds removed from my checking account?
The processor will usually mail a Notification of Chargeback when
the debit is transmitted to your bank. It takes 2-3 business days
for this debit to reach your checking account. Most often, you will
receive notification at the same time your checking account is debited.
With the optionalservice, chargebacks can be identified the following
Why did I get a chargeback without a prior
retrieval request? When I signed my processing agreement I thought
I would be given an opportunity to answer a dispute before it was
charged to my account.
Not all of MasterCard¡¯s and VISA¡¯s chargeback reasons
require the Issuer (cardholder's bank) to generate a retrieval request
before initiating a chargeback.
Why is my account charged for these transactions?
When the issuing bank initiates the chargeback they charge your
Why didn't anybody tell me about chargebacks
before I signed my processing agreement?
Your sales representative was responsible for informing you about
chargebacks. However, the information is also included on your Merchant
BankCard Agreement. For more information, please see our Introduction
to Merchant Services.
How much do chargebacks and retrievals cost
You can expect to pay anywhere from $10 - $20 / chargeback. This
fee is to cover expenses with processing. To reverse a chargeback,
when it's possible, costs you nothing.
Is the risk of chargeback greater if I manually
enter the credit card number?
If you are a general retail merchant where a card is present but
do not get an imprint (manual or electronic), you may lose money
through a chargeback when the cardholder disputes the transaction.
Why did ECHO allow the customer to take
their money back?
This decision was made by the Issuing Bank upon reviewing the letter
of dispute sent to them. This does not mean that this decision is
final or you have no rights to rebut their chargeback. Work with
your processor to dispute chargebacks if there are valid reasons
for doing so.
Who is going to pay for my bounced check
fees because this chargeback was taken from my account?
Per the merchant¡¯s contract with the processor the merchant
should keep enough money in his account to cover any chargebacks.
I issued a credit and I still received a
In these cases for some reason the Issuer did not see the credit
issued by the merchant. Sometimes the credit is issued after the
chargeback was initiated and they ¡®cross¡¯. All you have
to do is represent the item and it will be credited to your account.
With the service, this is made even easier.
I was told that an authorization guaranteed
An authorization will only verify that an account is open and that
there are funds available. However, if a card has been stolen and
the loss has not yet been reported, any charges made by the criminal
can later be charged back by the cardholder.
Can a credit card processor protect me from
There is a limited amount that a processor can do to protect a merchant
from chargebacks. Let's face it, as a merchant you will be held
responsible for any chargebacks.
What can I do to prevent this from happening?
General retail merchants generally do not have problems with chargebacks.
Mail, phone and Internet merchants can minimize chargebacks by making
sure the name they advertise under and the name they process through
are the same or the processing name is in a prominent place on the
receipt. Be sure to include a receipt in any product sent to the
customer. Reply promptly to retrieval requests. Authorize every
transaction and use the AVS if possible. If you use AVS do not ship
to an address different than the address verified.