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Introduction - Chargeback

Chargeback is a dispute against a particular transaction raised by the cardholder (end-user), and reported to their card issuing bank.

A chargeback is a provision by banks and card networks such as Visa & MasterCard to protect buyers from unauthorized or fraudulent payments.

Once the cardholder files a complaint, the bank reports the same to Zaakpay and initiates an investigative procedure.

Keep in mind that chargebacks may be issued for a number of reasons including, but not limited to, the following:

• An unauthorized party has made a purchase with the buyer's credit card

• The buyer has concerns about the validity of the purchase

• The buyer has been charged multiple times for the same order

• The buyer is unsatisfied with a purchase and has not been able to resolve the problem with the merchant

• The buyer has not received the purchased items

Chargeback Complaint Flow—

Why does merchants should avoid chargeback?

Merchants avoid chargebacks because they are costly and harmful to their business. Chargebacks lead to financial losses (including fees and lost sales), damage to reputation, potential account termination by payment processors, and a strain on resources needed to handle disputes. They can also result in products being lost without compensation. In essence, chargebacks increase operational costs and risks, making it important for merchants to minimize them.

How Zaakpay help us in resolving the chargeback?

Being a payment facilitator, Zaakpay will help you in resolving the chargeback. Here is the streamlined process for the same-

Chargeback process

1. Zaakpay receives chargeback notification from Acquiring bank.
2. Zaakpay notifies merchants . The merchant needs to provide their response within Reply date mentioned by Zaakpay.
3. Zaakpay verifies the documents against the chargeback raised and shares the same with the acquiring bank.
4. If merchant does not provide response before the Reply date, the acquiring bank will close the case in favour of the customer.

How merchant can review the chargeback and shares the required documents-

• In order to represent the chargeback, review the chargeback and explain to us the chain of events that took place.
• In case the goods/services have not been provided, review the issue and let us know if the customer is willing to accept the goods/services.
• In case the goods/services have been provided, share the proof of deliveries, invoices, any other authorized proof of product/service delivery.
• In case of a duplicate payment made, let us know so we can ask the bank to refund the amount back to the cardholder.

Chargeback phases and Turn Around Time (TAT)

What are pre-arbitration and arbitration?

When the issuer and acquirer cannot reach a final decision on a contested chargeback on their own, any of the parties involved can request a final arbitration by the card network.

Pre-arbitration is the last chance for the merchant or issuer to accept liability for the dispute before arbitration.

In arbitration, the burden of proof is once again on the merchant to provide evidence that debunks the dispute claim.

Arbitration fees vary by network, but for arbitration whichever party loses the case will have to pay $500 in fees as a penalty along with transaction amount.

Why have I received a chargeback for an old transaction?

Credit card associations have different rules regarding the time period a buyer is allowed to initiate chargebacks. These time periods may also be affected by the specific chargeback reason and are determined by the schemes, not by the Zaakpay.

As a result of the differing rules, some chargebacks can be raised up to 120 days from the date that the service was completed or delivery was expected. If services sold have no clearly defined completion date or items sold have a delivery date far in the future, it is possible to receive late chargebacks.

How merchants can avoid a chargeback

To avoid chargebacks, merchants can implement several best practices that focus on reducing disputes, enhancing customer satisfaction, and improving fraud prevention. Here are some effective tips:

1. Clear Product Descriptions

• Provide detailed and accurate product descriptions to ensure customers know exactly what they’re purchasing.
• Include high-quality images, specifications, and sizes to avoid confusion.

2. Transparent Billing

• Ensure your company name appears clearly on customers’ bank or card statements to prevent confusion.
• Send email confirmations for all transactions with a summary of the order and contact information.

3. Accurate Shipping Information

• Always provide tracking numbers for shipped items and ensure the delivery address is correct.
• Use signature confirmation for high-value items to prove delivery.

4. Customer Communication

• Offer multiple ways for customers to contact you (email, phone, chat).
• Resolve disputes or complaints quickly and professionally before they escalate into chargebacks.

5. Clear Return and Refund Policies

• Make your return and refund policies clear, easily accessible, and fair.
• Ensure customers understand the process to return products, which can reduce the likelihood of chargebacks.

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6. Provide Exceptional Customer Service

• Promptly address any customer complaints or issues to prevent them from resorting to chargebacks.
• Offer easy-to-use self-service options for cancellations or returns if applicable.

7. Offer Strong Proof in Disputes

• If a chargeback occurs, be prepared to provide compelling evidence, such as delivery confirmation, customer correspondence, or product descriptions, to fight the claim and win the dispute.

8. Monitor Your Chargeback Ratio

• Keep track of your chargeback ratio and set internal limits to ensure it stays below the acceptable threshold set by your payment processor (usually 1% of total transactions).
• Take corrective action if you notice a rising trend in chargebacks.

By following these tips, merchants can reduce the likelihood of chargebacks and protect both their revenue and reputation.

I've provided documentation to contest the chargeback. What should I do next?

The chargeback process normally can take up to 90 days. However, depending on the card type, the reason code, and the complexity of the case, the process may take longer. You will be notified by email.

We will contact you as soon the credit card association has reached a decision on your case. In the meantime, you may want to review our suggestions on how to prevent chargebacks and disputes for future orders.