Fighting Bank Chargebacks
Understanding Cardholder Vs. Issuing Bank Chargebacks
The process of filing and disputing a chargeback involves multiple different parties – the cardholder, the merchant, the issuing bank, the acquirer, the card network. Sometimes though, one or more parties are only partially involved in the process. An example of one of these instances would be a bank chargeback.
What is a Bank Chargeback?
You may already be familiar with cardholder chargebacks. These are initiated by a customer who believes that a merchant has taken advantage of them. In some cases, though, it is the cardholder’s bank, known as the issuing bank, who might initiate a chargeback instead.
An issuing bank might file a chargeback if they detect an anomaly or error in the transaction. In these instances, the cardholder may not even be aware of what is going on – this will all take place behind the scenes, but in the end, the merchant will still be the one who loses.
For each chargeback, an issuing bank will apply a chargeback reason code which will explain why the transaction was not accepted. Some of the most commonly used reason codes for bank chargebacks include:
|76||Incorrect Currency or Transaction Code|
|77||Non-Matching Account Number|
|80||Incorrect Transaction Amount|
|93||Merchant Fraud Performance Program|
|4802||Requested/Required Information Illegible or Missing|
|4846||Correct Transaction Currency Code Not Provided|
|4849||Questionable Merchant Activity|
Can Merchants Fight Bank Chargebacks?
With cardholder chargebacks, merchants have multiple options to pursue. In these cases, the merchant may turn to their acquiring bank in order to dispute the claim through a process referred to as chargeback representment.
However, in the case of bank chargebacks, representment options are limited. The process tends to be more complex, and the merchant is unlikely to see any satisfaction if they try to dispute a bank chargeback.
Since the odds of a chargeback reversal are not good in these instances, it is in the merchant’s best interest to try and prevent bank chargebacks from occurring in the first place.
As you can see in the above charts, many of the causes of bank chargebacks can be avoided through various means – being sure not to process a transaction multiple times, processing transactions within a reasonable time frame and so on. The best course of action in attempting to minimize your risk for bank chargebacks is to provide attentive customer service, and pay special attention when processing payments to make sure that there are as few errors as possible.
There is no way to fully eradicate the possibility of a chargeback, but through positive business practices you can definitely mitigate your risk.