Chargebacks are an inevitable part of doing business when you accept payments by card. There are different types – legitimate chargebacks and illegal ones resulting from fraudulent activity.
By understanding the rights, responsibilities and remedies associated with chargebacks, you’ll be able to minimise your risks and help avoid unwinnable, or costly, disputes.
What is a Chargeback?
A chargeback is a transaction reversal initiated by a cardholder's bank or payment card provider, often in response to a dispute or a problem with a purchase. When a chargeback occurs, the funds for a particular transaction are taken from the merchant's account and returned to the cardholder.
How should I determine whether to accept the Chargeback or not?
Depending on the circumstances, value and available documentation, you will need to consider carefully whether you have enough evidence to dispute and if it’s worth disputing.
There are 7 most common Dispute types:
- Duplicate Charge
- Paid By Other Means
- Goods or Services Not Received
- Cancelled Merchandise or Services
- Goods or Services Not as Described or Defective
- Incorrect Amount
- Unauthorised MOTO Transaction
What are the stages of Chargeback?
Download the chargeback flyer here for a more detailed explanation.
Stage 1: Cardholder disputes a card transaction with their Issuing Bank
Stage 2: The Issuing Bank lodges the Chargeback with the Card Scheme if valid
Stage 3: The Card Scheme debits Till while the dispute is investigated
Stage 4: Till notifies you immediately and debits your account on that day
Stage 5: You can either accept the Chargeback or defend it with precise, documented evidence
Stage 6.1: If the evidence is insufficient or insufficiently strong or the cardholder is not to blame, the debit will remain
Stage 6.2: If your evidence is accepted, the debit will be reversed and you will not be out of pocket
What are the timeframes?
Chargebacks can cost you time as well as money, so it is in your interest to act swiftly when one occurs. In most cases, a cardholder can contact their bank and request their money back within 90 to 120 days from the date of the disputed transaction, depending on the reason code.
These timeframes are controlled by the schemes, not Till. If you dispute a chargeback, you’ll need to provide detailed documentation – and then the cardholder’s Bank has 30 to 45 days to either accept your evidence or continue the dispute.
What about the cost of chargebacks?
All the rules, regulations and timeframes are determined by the card schemes, typically Visa, Mastercard, UnionPay and the EFTPOS providers, including but not limited to credit card, debit card and prepaid card – and Till is bound by them. So, when a chargeback occurs, you will be notified, and the chargeback will be debited from your merchant account on that day.
But Till’s AUD$25 admin fee per chargeback will appear on your monthly invoice.
If you require more information about chargback, please contact our chargback team at chargebacks@tillpayments.com