A chargeback occurs when a customer files a complaint with their card-issuing bank, claiming that a transaction made with their card was unauthorized or there was an issue with the product or service they received.
In Solidgate, the chargeback process typically follows these steps:
- Customers file chargeback requests with their card-issuing banks.
- If the issuing bank deems the request valid, it reverses the transaction and temporarily credits the customer's account.
- The acquiring bank (the bank representing the merchant) receives notification of the chargeback and debits the merchant's account for the transaction amount and any associated fees.
- Solidgate informs the merchant of the chargeback and provides an opportunity to dispute it by submitting evidence that supports their case.
- If the merchant’s evidence is sufficient, the chargeback may be reversed, and the funds returned to the merchant’s account. If not, the chargeback remains, and the customer retains the refund.
Verifi’s Cardholder Dispute Resolution Network (CDRN) provides a unique, patented process that integrates with top issuers to offer high-quality service for merchants and issuers in resolving disputed payments. It minimizes chargebacks and improves customer satisfaction by giving immediate notifications from issuing banks about cardholder issues, allowing merchants to address these issues before they escalate into chargebacks. CDRN temporarily freezes chargebacks for 72 hours, providing a window for resolution and response.
CDRN works as a closed-loop system that directly involves both merchants and issuers, fostering efficient communication and resolution. Merchants enrolled in the CDRN program receive alerts about potential disputes, allowing them to take preemptive action, such as issuing refunds or resolving customer queries, thus avoiding the chargeback process. This system not only reduces the occurrence of chargebacks but also helps maintain a healthy customer relationship by addressing their concerns promptly and effectively.
Verifi Order Insight is a tool designed to preemptively tackle disputes by providing issuing banks with real-time transaction data. This data includes critical information like delivery confirmations, purchasing device IDs, and records of customer support interactions, which help in linking the cardholder to the purchase and recognizing legitimate transactions.
By supplying detailed transaction information, Order Insight aids cardholders in recalling the transaction details, thus reducing instances of friendly fraud where a genuine transaction is mistakenly disputed. It also helps issuing banks in making informed decisions before registering a dispute, significantly cutting down unnecessary chargebacks. This proactive approach not only benefits merchants in reducing dispute rates but also enhances the overall customer experience by clarifying transaction details, leading to increased customer trust and loyalty.
Verifi Inform is a service that enhances the dispute resolution process by enabling issuers to send fraud alerts to merchants. These alerts provide early warnings about potential fraudulent transactions, allowing merchants to take necessary action quickly. Inform plays a crucial role in tracking fraudulent activities and expediting the dispute notification process.
By utilizing Inform, merchants gain the advantage of receiving quick updates on disputes, which is crucial for timely and effective chargeback management. The service aids in identifying and addressing fraudulent transactions at an early stage, thus reducing the financial impact on merchants. Additionally, it streamlines the communication between issuers and merchants, leading to a more efficient resolution process and maintaining a secure transaction environment.
Consumer Clarity is a feature that provides cardholders with real-time access to additional transaction data on their online statements. This data helps in better understanding and recognizing their transactions, thereby assisting issuers in determining the legitimacy of a purchase.
The real-time display of detailed transaction data plays a critical role in reducing misunderstandings and clarifying transaction details for the cardholder. It helps in preventing disputes arising from unrecognized transactions, which is a common issue leading to chargebacks. By implementing Consumer Clarity, issuers and merchants can significantly reduce the number of disputes, thereby maintaining a healthier transaction environment and improving customer satisfaction.
Ethoca serves as an alert system for merchants, warning them about potential disputes through the global Mastercard network before they escalate into chargebacks. These alerts provide merchants with the opportunity to proactively address issues by refunding or resolving them, thus preventing chargebacks from occurring.
By receiving early dispute notifications, merchants can take immediate action such as issuing refunds, stopping shipping, canceling subscriptions, or other appropriate measures. This proactive approach not only reduces the likelihood of a chargeback but also minimizes the negative impact on the merchant’s account and reputation. Ethoca’s network coverage ensures that merchants are alerted in time to take necessary actions, thereby enhancing the effectiveness of their chargeback management strategy.
Rapid Dispute Resolution (RDR) is a proactive solution by Visa that prevents chargebacks at the pre-dispute stage. When enrolled in RDR, merchants can automatically refund disputed transactions before they turn into chargebacks, thus keeping their chargeback score healthy. RDR alerts do not require any merchant action and are marked as “resolved” in the notification.
The RDR system is linked to the merchant’s account through BIN and CAID, ensuring accurate alert reception and preventing false alerts from affecting the merchant. It features a powerful decision engine where merchants can set rules for automatic dispute resolution, such as refunding all RDR alerts or setting specific transaction amount thresholds for disputes. The system provides various parameters for rule customization, ensuring tailored dispute management and maximizing chargeback prevention.
Furthermore, RDR alerts are not counted in the chargeback rate, and no additional fees are imposed, making it a cost-effective solution for chargeback management. Merchants can use RDR in conjunction with CDRN to cover a broader range of issuers and maximize chargeback prevention.
VISA Resolve Online (VROL) is a web-based tool that facilitates efficient dispute resolution between issuers and acquirers. It offers a collaborative platform for exchanging information related to disputes, including chargebacks and retrievals. VROL enables tracking of dispute statuses, sharing of documentation and evidence, and secure communication among participants.
The tool streamlines the dispute resolution process by reducing the time and costs involved in managing and resolving disputes. It is accessible to authorized VISA issuers and acquirers, who can manage disputes for VISA-branded payment cards through this platform. VROL’s design focuses on enhancing the efficiency of dispute resolution, thereby contributing to quicker resolutions and improved relations between issuers, acquirers, and merchants.
Compelling evidence 3.0 is a feature that aids merchants in dispute prevention by providing robust supporting evidence for transactions. This tool is designed to potentially lead to more favorable resolutions in cases of disputes. It offers merchants a way to substantiate the legitimacy of transactions, thereby reducing the likelihood of unfavorable chargeback outcomes.
By utilizing Compelling evidence 3.0, merchants can present a stronger defense during the dispute process, improving their chances of winning chargeback disputes. This tool is particularly effective in providing evidence for digital transactions, where traditional proof of purchase might be lacking. It reinforces the merchant’s position in disputes, ultimately leading to better chargeback management and reduced financial losses.
In Solidgate, theentity signifies the start of the dispute process, containing the chargeback type and chargeback flow.
The chargeback flow describes the stages of the dispute process, such as starting disputes, pre-arbitration, or arbitration, and appears as separate entities, akin to transactions within the order.
|The customer initiates a transaction dispute with their card issuer.
|The issuer rejects your defense and initiates pre-arbitration.
|The issuer or cardholder disputes the merchant’s second presentment, moving the case to issuer network arbitration.
When a customer disputes a transaction with their card issuer, a chargeback is created. This is the merchant’s opportunity to challenge the chargeback request. The challenge involves providing evidence that the transaction is valid, not fraudulent, and that the customer is verified, and the service was provided.
A respective fee is applicable for each chargeback processing. Merchants should contact their account manager for information regarding the fee. It is essential to monitor and respond to these disputes as quickly as possible.
If the card issuer declines the merchant’s defense to the cardholder’s inquiry based on the evidence provided, the merchant has two options:
- Accept the chargeback request.
- Challenge the chargeback request a second time and enter pre-arbitration.
This is known as the second chargeback or pre-arbitration. If the merchant or cardholder disputes the transaction a second time based on new evidence, the issuing bank can pursue this as a second chargeback, entering pre-arbitration.
At this stage, the parties involved - the bank, cardholder, or merchant - are unable to resolve the dispute independently. A representative of the card scheme/network (e.g., VISA, MasterCard, Discover) is asked to intervene and make a judgment.
Chargeback statuses indicate the different stages of the chargeback process, including investigation and resolution.
|Solidgate has received the Chargeback.
The merchant must decide to accept or defend against it.
|Solidgate has received and forwarded the supporting documents to the card scheme.
It is no longer possible to change these documents.
|The merchant has successfully challenged the chargeback.
The disputed amount is credited back, pending issuer review.
|This final status occurs if the merchant accepts the dispute or fails to send defense documents.
|The dispute is resolved at the pre-dispute stage through Proactive Dispute Resolution, not affecting the dispute ratio.
Resolved disputes will not count against the dispute ratio (RDR status).
|If a refund and RDR occur simultaneously, the chargeback is canceled to prevent double credit to the cardholder.
To handle chargebacks in Solidgate, merchants can use the Solidgate API, Webhook, or HUB.
To access these reports, merchants need to supply a Merchant ID, a signature, and the required dates formatted in UTC+0. The API also facilitates pagination, featuring a
next_page_iterator field in the response, which enables retrieval of subsequent result sets.
The is designed to avoid duplicate event processing. This is achieved by making event processing idempotent. Merchants can accomplish this by logging each event ID and ensuring that events already logged are not processed again. Solidgate's Webhook offers comprehensive chargeback and order details through its header parameters and JSON response schema, aiding in efficient processing.
Chargeback and order statuses are determined using specific enumerated values. Additionally, the card scheme involved provides a
Gain a better understanding of the nature of your chargebacks and effectively manage them. reason code and a detailed description for each chargeback. These reason codes are particularly useful for analytical and segmentation purposes.
This feature-rich section includes search options based on various criteria like order ID and customer email, enabling users to quickly find and access detailed information about disputes.
Moreover, the history feature in Solidgate HUB is an essential tool for tracking the progress of disputes and initiating necessary actions
Respond to chargebacks
If you have evidence confirming the legitimacy of a transaction or if the transaction amount is significant, you may choose to defend against disputes. Chargebacks post-refund can occur due to delays in the issuing bank’s system, customer-initiated chargebacks, discrepancies in refund amounts, or technical issues at the bank. To mitigate these, merchants can submit documentation for representment to prove a refund was issued. However, it’s vital to note that winning such a case still incurs a chargeback fee and affects the chargeback ratio.
|REQUIREMENTS FOR THE PREPARATION OF DOCUMENTS FOR DISPUTE:
|Compelling evidence *Please provide as much information as possible about the user below the text (screenshots of the agreements, customer's documents, proofs of using the product)
|Fraud - card-absent environment Visa: 10.4 MasterCard: 4837 AMEX: F29 Discover: UA02
date, and time of the products or services successfully downloaded. The
evidence must also contain at least two of the following pieces of
|Merchandise/Service not provided Visa: 13.1 MasterCard: 4855 AMEX: F29 Discover: UA02
|Duplicate processing/Paid by other means Visa: 12.6 MasterCard: 4834 AMEX: P08 Discover: DP
|Cancelled recurring transaction Visa: 13.2 MasterCard: 4841 AMEX: C28 Discover: AP
Consider accepting the dispute in the following scenarios:
- You lack the necessary information to address the chargeback reason code.
- The transaction amount is too low to justify the effort in gathering compelling evidence.
- The cost of the transaction does not outweigh the potential loss incurred from a second chargeback fee.
- The transaction has been identified as fraudulent.
- The customer has returned the goods, or there was a failure in delivering the goods.
This process involves several stages, starting from an internal inquiry at PayPal’s Resolution Centre to potential external chargebacks initiated by customers’ card issuers.
PayPal internal inquiry: Customers can file disputes directly with PayPal, giving merchants a chance to address the issue within seven days. If unresolved, customers can escalate to a formal claim within 20 days.
PayPal transaction dispute: A formal notice from PayPal encouraging customers to contact merchants directly. Merchants can communicate through PayPal’s chat in Solid admin panel. However, resolved disputes in merchants’ favor can still lead to external chargebacks.
PayPal alert (Pre-Chargeback): Alerts indicating potential chargebacks, allowing merchants a 20-hour window to issue refunds and respond proactively.
Internal claim (Chargeback): If disputes escalate, merchants have 10 days to provide evidence against the claim. Refunding at this stage can prevent further chargebacks.
External chargeback: Initiated by customers’ card issuers, requiring merchants to respond within 10 days. Contesting these chargebacks involves providing evidence of service delivery.
PayPal disputes representment: Merchants can protect their business reputation, recover lost revenue, avoid additional fees, and improve customer satisfaction by representing disputes. Clear and detailed transaction information, polite communication, and detailed records are key. Specific evidence types may be required based on the dispute reason, including proof of fulfillment, refund, or other documentation supporting the merchant’s case.
General recommendations for representment:
- Provide clear, detailed transaction information.
- Maintain politeness and respect in communications.
- Keep detailed records of all related communications.
- Supply tracking information and product details.
- Respond promptly to buyer inquiries.
- Document previous disputes.
- Be objective and factual in representations.
- Prepare for additional information provision if escalated.
Dispute reasons and required evidence:
MERCHANDISE_OR_SERVICE_NOT_RECEIVED: Provide proof of fulfillment like tracking numbers or digital product delivery confirmation.
MERCHANDISE_OR_SERVICE_NOT_AS_DESCRIBED: Offer descriptions, item URLs, return policies, and other relevant product information.
UNAUTHORISED: Supply proof of fulfillment, such as order logs or buyer communications.
CREDIT_NOT_PROCESSED: Present proof of refund and communications regarding credit issuance.
DUPLICATE_TRANSACTION: Show evidence for original and duplicate transactions.
INCORRECT_AMOUNT: Provide documentation of the correct amount and refund IDs.
PAYMENT_BY_OTHER_MEANS: Demonstrate proof of payment through alternative means.
CANCELED_RECURRING_BILLING: Show evidence of subscription cancellation and associated logs.
Document format requirements:
- Up to 50 MB per request.
- Individual files under 10 MB.
- Supported formats: JPG, JPEG, GIF, PNG, PDF.
- In CIT disputes marked as fraudulent, the responsibility primarily lies with the card-issuing bank, as these transactions undergo the bank’s security checks.
- In MIT disputes, the responsibility shifts to the merchant, as they initiate these transactions. This holds true for both one-time and recurring transactions.
- In disputes for undelivered goods/services or substandard goods/services, the responsibility lies with the merchant, regardless of whether it’s a CIT or MIT.
High chargeback rates can negatively impact merchants, potentially leading to account termination or freezing. It’s crucial for merchants to implement fraud prevention measures and ensure proper transaction authorization.