Chargebacks and retrieval requests are inevitable part of doing online business. Many businesses need to handle chargebacks and retrievals on a daily basis, while for some others a chargeback or retrieval request is a rare thing. Yet in both cases it is good to know what the difference between the chargeback and retrieval request is. This knowledge will enable you to react quickly and take the appropriate measures to resolve these situations in a timely and efficient manner when they occur.
A retrieval request, also known at some banks as “soft” chargeback, takes place when the credit card issuer contacts the merchant to obtain information about a transaction charged to one of its cardholders. The reasons for retrievals can be various: it may be a result of a customer question or dispute, inaccurate or incomplete transaction information, a processing error or an indication of potential fraud. The bank will request a legible copy of the transaction authorization proof.
The cardholder may initiate the retrieval when he or she does not recognize the transaction or may ask for specific information regarding the transaction. Then the issuer will turn to the merchant, requesting the explanation. It is advisable that the merchant contacts the customer by telephone or e-mail in order to explain the situation and find out what doubts the customer has about the transaction. Usually, at that point, after the merchant’s explanation is delivered, the situation can be resolved in favour of the merchant . In other words, the customer would recognize the transaction and accept the purchase. Also, during such a contact attempt, some other solution to the situation that will satisfy both parties can be found. It may happen, though, that there will be no reply from the customer or the customer will not authorize the transaction. In such a situation the merchant should consider issuing the refund as the chargeback that will result may be hard to defend.
The merchant usually has 10 to 20 days to handle this situation (but the time frame depends on the bank). If the merchant does not respond, the retrieval request will turn into the chargeback for reason “requested item not received”. It is worth mentioning that such a chargeback has no reversal rights if there was no prior reaction of the merchant to the retrieval request.
The customer may contact their bank with the direct request for money reversal. Such a procedure, initiated by the credit/debit card holder is called a chargeback. The reasons for chargebacks can be different, for example: the goods have never arrived, the item was different than the one presented on the sales website or the credit card was used without the cardholder authorization (the transaction was fraudulent).
Once the chargeback is initiated, the issuing bank contacts the merchant’s bank and places a hold on the funds related to the chargeback. The merchant receives the e-mail notification about the chargeback and is asked to provide the documentation that could help to dispute the chargeback. Each chargeback can be objected to, as long as the merchant has good reasons to dispute it. If the product was not shipped as it had been agreed on or it arrived faulty, the credit card was stolen and a fraudulent transaction was processed – it will be hard to resolve the chargeback request to the benefit of the merchant.
The bank will ask the merchant for transaction records, shipment and delivery proof, the records of any correspondence with the customer and, if the transaction was previously refunded by the merchant, the proof that the money was reversed on their end. If the issuing bank accepts merchant’s documentation, the chargeback will be reversed and the amount of the disputed transaction will be credited to the merchant account. This credit is, however, conditional; if the cardholder disputes the reversal, a second chargeback may be initiated. In addition, if the merchant’s claim is declined or if the merchant’s documentation does not support their claim, the chargeback on their account will be debited anyway. It usually takes 30 days to dispute the chargeback and it may take the customer’s credit card company up to 75 days to resolve the chargeback case and come to a final decision.
It is good to remember that both retrievals and chargebacks are governed by credit card organizations and their laws. The merchant needs to follow closely these companies’ regulations and timeframes as well as documentation requirements in order to ensure the proper handling of the retrieval and chargeback request.
Compliance with these rules will increase your chances of winning the disputes that may arise while doing your online business.
photo source: SXC.hu