With advent of technology, growing usage of ecommerce by merchants to sell goods on global level. It is been observed that the people have started taking the privilege of paying through cards, as the service provided by the ecommerce websites. But, very few aspiring merchants know that a customer can ask for refund within three month of transaction for any reason like not recogainizing the transaction, not satisfied with the product or service, merchandise not delivered or with the intention of frauds.
This dispute of transaction and asking the money back for any given reason is called Chargeback. For chargeback, if a customer feels that the merchant is cheating for any reason, customer directly contacts to the banks for the refund of the transaction. Though, in many cases, the bank places a conference call between merchant, customer and the cardholder’s bank to see if merchant and customer can resolve the problem. If the customer is not satisfied with the merchant’s conversation, they ask finally ask for the money back. For this reason, the cardholder’s bank issues the credit for the cardholder’s account. Asks merchant account bank to issue a debit for the merchant account the cardholder’s bank also issues the requirement of document for the merchant, if the merchant likes to fight the chargeback and can prove that customer’s reason for refund is not valid.
Merchant have limited time to respond to fight chargeback and to provide legal documented proofs to the cardholder’s bank. If the proofs examined as valid documents, the credited amount to the customers is take back again and is given to the merchant again. As the decision about chargeback is ruled in favor of merchant, the customer/cardholder has the right to file the second chargeback on the transaction; this is called the “Pre-Arbitration” in VISA’s chargeback process and “Second Chargeback” in MasterCard chargeback process. For this, the merchant have to repeat the same process for fight again for the transaction to be proved as valid.
To fight chargeback, merchant’s need to be active for representment every time the bank issues the request of documents. Delay in representment many times results in loss of charges of the product from the merchant account. This option of repetitive filing of chargeback is the drawback of this internet transaction method. Many people try to take advantage of this clause of repetitive dispute of transaction. As fraudster develop new ways of cheating the merchant, and this repetitation of filing chargeback is one of them.
Chargeback is one of the crucial thing to be handled in the ecommerce business as it is observed that the most of part of the profit is lost if a merchant fails to fight chargeback with an effective representment of the documents to prove the validity of the transaction. To fight the Chargeback, for documentation knowledge about the reason codes given by the card brand companies like VISA, MasterCard and other that helps to identify the reason behind the initiation of the transaction dispute. According to these reason codes the merchant needs to collect the documents for proving the authenticity of the transaction. The merchants face the problem is having the well qualified staff that can handle the chargeback cases effectively. Here, the time and resource of the merchant are put into use while starting another department for handling the chargeback, the tension of following up the cases for which the documents are sent to the bank and also sending back the documents to the bank of the 2nd chargeback on the transaction is occurred.
For this, the safest way is to hire a qualified company who specifically deals with the chargeback cases of the ecommerce business. These can be called as the chargeback experts who, when hired by the merchants handle the chargeback, by keeping the contact with the bank, and asking them about the details of the merchant’s accounts. These companies also keep track of the result of the chargeback decision that is called verdicts. The verdicts that are resulted in favor of merchant, save the transaction amount of the merchant.
While hiring a company to specifically handle the chargeback case, a merchant needs to keep the thing in mind that the company gives the equal importance to the 2nd chargeback condition. As discussed above that the fraudsters wait for this mistake when merchant thinks that the verdict is in their favor, they stop following up about that transaction.
Now, the working of these chargeback expert companies differs. There are many companies who handle chargeback for the ecommerce merchants. File the documentation according to the reasons of the transaction dispute, follow up for the verdicts. But, the condition when the verdict results into merchant’s favor, some companies stops working on that case. But, there companies like “Chargeback Security”, who keeps track that if the customer again disputes the transaction, after the verdict. They again send the representment with the required documents to prove that the transaction is done under the legal rules and regulations.