Chargeback Representment Can Help Your Business
Learn To Master the Representment Process
Receiving a chargeback or transaction dispute is not necessarily an automatic loss for merchants. Cyber shoplifters may have their proverbial hands in your pockets, but there are options to consider. If a merchant’s acquiring bank receives a chargeback from a cardholder’s issuing bank, it is important to take a serious look at the details of the dispute.
How to Know When to Re-present a Chargeback.
There are at least three stages to every representment case. These stages are mentioned below in bold. Steps four and five, however, only occur if the case is not resolved in the representment stage.
- First Presentment
- First Chargeback
- Representment (Visa) or Second Presentment (MasterCard)
- Pre-Arbitration Chargeback (Visa) or Second Chargeback/Arbitration Chargeback (MasterCard)
- Arbitration Case Filing
The first presentment is the original purchase, also known as a presentment of the initial transaction. The first chargeback is the notification that the cardholder or issuer is requesting a reversal of the transaction. Once the first chargeback is filed, merchants have the opportunity to re-present the transaction to the issuing bank.
After receiving a chargeback, merchants must then examine the details of the purchase. Did the consumer receive the product as ordered? Was it delivered in a timely manner? Did the merchant itself make a mistake in the process? Did the cardholder not receive a refund as requested? If the verdict arises that the merchant made no errors in the sale and delivery of the product, it must then decide if it wants to fight back.
Things to consider when disputing chargebacks include ticket price, the presence of compelling evidence, previous communication with the cardholder, and if the benefits of winning the case outweigh the cost of completing representment.
How Chargeback Representments Work
Once a merchant decides that it wants to fight back against an unjust chargeback, it must begin gathering compelling evidence. With strict time limits put in place, the merchant is under pressure to construct its case usually in under a weeks’ time.
There are many facets of the transaction that could result in compelling evidence that the chargeback is unjust:
- Proof of Purchase. A clear and legible sales receipt is nearly always necessary in proving the legitimacy of a sale. Any order forms, special requests, or checked boxes should be included as evidence. Matching IP addresses, email addresses, billing and shipping addresses, full names, dates, and card numbers are vital in proving that the cardholder authorized the order or gave a family member permission to do so. It is also important that merchants include proof that all of the required fields were filled out upon checkout, including full name, expiration date, card number, and card verification value.
- Communication Transcripts. Any and all prior communications with the customer—such as past email chains, telephone call transcripts, or physical letters—that help prove the legitimacy of the sale can be inherently helpful. If merchants reach out to the customer consistently from the time of the purchase through the delivery of the product, there is a higher chance that the customer was aware the transaction had been completed.
- Proof of Delivery. Anything that can prove that the product purchases was indeed delivered to the cardholder is crucial. This would include tracking information, a signed delivery receipt, AVS matching, and any delivery confirmation communication between the customer and the merchant or delivery company. For digital goods (such as software or other instantly downloadable or streamed products) IP addresses, email addresses, time stamps, and downloads can prove the delivery of the product to the cardholder.
In other cases, representments are handled solely between the issuing bank and the acquiring bank. In cases where a chargeback is filed against a merchant by an issuing bank due to a processing error, the acquirer may have all the necessary paperwork available to file representment. These cases sometimes do not involve the merchant or consumer directly at all.
Representments May Not Be Everyone’s Strong Suit
Merchants are most successful when they are doing that they do best: being merchants. However, chargebacks can’t simply be accepted as a cost of doing business. They must be fought. They must also be prevented. Merchants who exceed the 1% chargeback level that limits them are labeled high risk merchants. When excessive chargeback levels are reached, they are even at risk of losing their merchant accounts. While chargeback insurance may sometimes be helpful in combating chargeback issues, it is not a flawless one size fits all solution.
There are ways to prevent chargebacks from happening. The implementation of small changes—like confirmation emails, never completing a transaction without authorization codes, the use of an address verification service, electronic signature forms, and clearly stated advertisements and terms and conditions of the sale—can deter a customer from committing friendly fraud. If a cardholder does file an unwarranted chargeback despite all of these tactics, they can then be used to fight back.
If you or your business is feeling overwhelmed by chargebacks, you don’t have to win the war alone. We are here to help. Contact us today; our customizable services are able to address any issues your business is dealing with.