Chargebacks | Chargeback Protection | AVP Solutions

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CHARGEBACKS
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What Is A Chargeback?

• After a consumer successfully disputes an item on
  their account statement or transactions report, a
  chargeback is a charge that is returned to a
  payment card. Chargebacks can happen on credit
  cards or debit cards (and the underlying bank
  account). A cardholder may be allowed a
  chargeback for a variety of reasons. Either the
  merchant or the cardholder's issuing bank can
  initiate the chargeback process. When a
  chargeback happens, merchants usually have to pay
  a fee to the card issuer.

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Chargeback Processing

• Either the merchant or the cardholder's issuing
  bank can start the chargeback process. The
  process is comparable to a conventional
  transaction when begun with a merchant however,
  money is removed from the merchant's account and
  deposited with the cardholder's issuing bank.
• A chargeback started by a merchant, for example,
  might begin with a request from the merchant to
  his or her acquiring bank. The acquiring bank
  would then call the card's processing network to
  transfer funds from the merchant's bank account
  to the cardholder's bank account at the issuing
  bank.
• If a chargeback is started by the issuing bank,
  the chargeback is facilitated by communication on
  the issuing bank's processing network. After
  receiving the signal, the merchant bank
  authorizes the fund's transfer with the
  merchant's confirmation. The issuing bank may
  offer the cardholder a chargeback while also
  forwarding the claim to a collection department
  in some situations, such as with fraudulent
  charges. In this situation, a bank assumes the
  risk and deducts the chargeback from reserve
  funds while investigating and resolving the
  claim.
• Chargeback transactions are typically charged a
  fee by merchant acquiring banks A merchant
  account agreement specifies these fees. Fees are
  usually imposed on each transaction to support
  the processing network's expenses. Chargebacks
  may result in additional penalties.

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Costs and Consequences of Chargebacks Merchants

• The merchant is charged a fee (which can range
  from 20 to 100 per transaction) every time a
  customer requests a chargeback. Even if the
  customer cancels the chargeback (for example, if
  it was filed due to non-delivery but the item
  arrives a few days later), the merchant will
  still be responsible for the fees and
  administrative costs incurred during the process.
• The merchant loses the income as well as any
  future profit potential if the customer files a
  chargeback and just keeps the goods.
• If chargeback rates continue to exceed the
  allowed level, the acquiring bank may close the
  merchant account. This implies that your merchant
  account has been frozen and your ability to
  process credit card payments has been terminated.
  Merchants who have a closed merchant account are
  unable to accept cards.
• While merchants have the right to contest illegal
  chargebacks, creating a good dispute takes time
  and efforttime and effort that could be better
  spent growing the business. Furthermore, without
  professional assistance, chargeback disputes
  rarely result in a victory for the merchant.

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Costs and Consequences of Chargebacks Merchants

• Since chargebacks are clearly defined as a form
  of consumer protection, it may appear that
  merchants are the only ones who can be victimized
  by invalid chargebacks and friendly fraud.
  Consumers, on the other hand, suffer in the end
• A chargeback means the cardholder will not
  receive a refund for several months (in
  comparison, a regular refund normally arrives in
  the consumer's account within a few days).
• The credit card account might be terminated if a
  consumer submits a chargeback and the bank
  discovers it is a case of friendly fraud. The
  loss of a credit card account might harm a
  person's credit score.
• If a merchant successfully challenges an
  illegitimate chargeback, the customer may be
  responsible for the chargeback expenses.
• In cases of actual fraud, cardholders who "cry
  wolf" too often will not receive the assistance
  they require.
• Finally, merchants boost their rates to
  compensate for expected chargeback fraud.

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Responsibilities of Merchants

• Chargebacks, both valid and fraudulent, must be
  minimized by merchants. Consumers will not have a
  solid basis to submit a chargeback against a
  merchant if they receive timely and responsive
  customer care, provide high-quality products and
  services, and pay attention to transaction
  details. Friendly fraud will become less
  prevalent.
• Merchants can discover more transactions that may
  result in chargebacks by taking the appropriate
  efforts to detect fraud. By preventing these
  fraudsters from making purchases, the chance of a
  chargeback is reduced.
• The last important obligation that businesses
  must deal with in this domain is chargebacks.
  Banks allow merchants who consistently contest
  chargebacks to file fewer chargebacks. Not only
  does chargeback representation help businesses
  keep more revenues, but it also helps customers
  understand what is and isn't a chargeback... and
  when it should be used effectively.

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Responsibilities of Cardholders

• Ownership of a credit card is a privilege, not a
  right, for cardholders. With that privilege comes
  some obligations, one of which is understanding
  what chargebacks are and when they can be
  utilized ethically and legally.
• Chargebacks should only be used in severe
  circumstances they should be the final resort,
  not the first when requesting a refund.
  Chargebacks should not be utilized lightly
  because the consequences for the business are
  serious.
• With adequate chargeback education, both
  merchants and customers should see a decrease in
  the number of false chargeback claims.

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CONTACT US

• Get in touch with us
• Address 6737 Variel Canoga Park, CA 91303
• Phone  [phone]
• Email sales_at_avpsolutions.com
• Contact us at AVP Solutions to get more
  information.