Chargebacks as many merchants know, is simply something that’s par for the course within the business world.
There may be situations where there are legitimate reasons for a customer to do a chargeback, and in those cases, the obvious right thing to do would be to accept it.
But what do you do if a chargeback seems a bit fishy?
This is where chargeback representment plays a key role.
What is chargeback representment? It’s simply a process that you can use to respond to a chargeback that you feel is unwarranted.
During this process, if you can provide evidence that you properly processed a transaction and that the cardholder is in the wrong, you’ll see yourself regaining lost revenue and protecting your profitability.
Most of the time customers mean well, but there can be issues from time to time especially in the day and age of eCommerce.
So in this article, we will discuss the reasons you should re-present, how the representment process works, how to create a case, and why after all this headache outsourcing may be your best option…
Reasons you should re-present
By now you have at least a general idea of what chargeback representment is, and that’s a good thing; you’re one step closer to regaining lost revenue. So let’s now go over in more detail why you should do it in the first place.
As mentioned earlier, regaining lost revenue is a key motivator for doing representment, but it’s not the only one. Yes if you never dispute a chargeback, you will lose money, and some chargeback’s could be malicious, but you also need to consider another important key point…
How risky you will look to your bank.
When you have a bunch of chargebacks, a bank will already flag you as a risky merchant, and potentially drop you. Not to mention, this is regardless of the fact that these chargebacks are legitimate or not. This is why it is crucial to take the extra step and dispute any situations that seem to be unwarranted.
“Friendly fraud” is another important reason you should re-present, and this is an often overlooked concept.
You may think to yourself that if an item doesn’t cost that much, it isn’t a real reason to dispute a chargeback, and that may or may not be true depending on how you feel about the situation.
This is why it is important to spot trends, and if you notice it happening often, or a specific customer continues to do it, doing a dispute can help protect your revenue and your reputation by sending a clear message that you won’t take this sitting down…
The chargeback representment process
So how does the chargeback representment process typically work?
Oftentimes it starts with a dispute from a customer or the bank noticing transaction issues, which often leads to the issuing bank verifying the dispute and returning the money without much hesitation to keep the customer satisfied temporarily.
From there, the bank will contact the merchant and notify them of the chargeback, and will also be charged certain fees that are based on their chargeback ratio and volume. Also, a reason code will be attributed to the chargeback, which ultimately is used to specify more details as to why the chargeback occurred and what is considered valid evidence for its dispute.
Then, if the merchant decides to move forward with the dispute, they must prepare the evidence needed to dispute the chargeback within several days, including receipts and other evidence that shows that the customer received and was satisfied with the product.
Once done, the merchant will then send this information to their acquiring bank, which will then submit this to the issuing bank.
At this point, they will then review the case and decide whether or not there was any wrongdoing on your part or the customer in terms of the purchase.
Bottomline, the bank plays a key role when it comes down to filing a dispute or not…
And considering the steps involved with this, and the amount of parties involved, it should come as no surprise that many merchants struggle with the representment process, and oftentimes don’t even try at all because of this…
Find out how to create an effective chargeback representment case and understand your options for chargeback representment in Chargeback Representment: What it is, and how to create a representment case – Part 2.