< Here’s an interesting fact: near about half of consumers in the US have engaged in an argument about at least one charge on their credit card statement at a certain point. It could be that the item didn’t work as we were expecting to do it too, or that it wasn’t delivered as explained. Maybe, the issue came due to misdirecting merchant policies. Or, maybe it was a case of chargeback abuse which is majorly known as friendly fraud. Whatever the case, the fact is that millions of cardholders can start a dispute with a few clicks in their banking app. This makes the process as noxious and uncomplicated as possible for them, at least. For merchants, there are unfortunate ill effects of the credit card dispute resolution process existing as it does now, including fees, abuse, and wasted resources. In this article, we’ll go through the credit card dispute resolution process and know how it works. We’ll also examine each step to see why chargeback resolution is so tough, and what you can do about it as a merchant to recover income and secure your business.
What is Credit Card Dispute Resolution?
Credit Card Dispute Resolution
Cardholders have the right to dispute fraudulent or wrong and invalid charges on their credit card statement with their issuing bank. Credit card dispute resolution is the process of resolving these disputes, usually involving tie-ups between merchants and banks.
Cardholders are inspired with courage to reach out to their issuing bank if they see some fraud or abuse. Odds are, the bank will approve a dispute with relatively less investigation of the cardholder’s claim. In many cases, it can be less expensive and easier for banks to approve disputes than it is to investigate the matter ahead.
This is the best news for cardholders, as it genuinely does help to track and resolve incidents of fraud. For merchants, on the other hand, this can move towards a marked hype in chargebacks. These incur huge fees and other pains that are tough to manage.
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The great news is that you can reverse and fight back if you believe a chargeback did not complain for a valid reason. Chargeback dispute resolution, or representment, is the process you’d use to gain this option.
When is a Credit Card Dispute a Valid Choice
First, let’s study how the credit card dispute process should work.
Chargebacks fulfill an essential role in the payments ecological system. They were made to safeguard cardholders from fraud and merchant ill practices. For example, if an item was never received, was damaged, or it was not the item you gave the order for— cardholders have a charge to dispute the charge, in terms with the Fair Credit Billing Act (FCBA).
Disputes can help customers look into billing issues with their credit card provider, balance out their credit scores, and help to investigate and fight fraud. When used correctly, payment disputes should keep everyone honest and accountable for mistaken or fraudulent transactions, without futuristic problems.
Having said that, disputes are not made to resolve matters like customer service complaints. Simply not ‘liking’ an item you agreed to purchase, or by panicking with established fulfillment and shipping times, are not valid reasons to look a credit card fight. Actions like these constitute friendly fraud, which is an increasing problem that heavy the pockets of the merchant each year.
The Process of the Credit Card Dispute Resolution?
Every step of the payment dispute resolution process offers specific challenges that can make it more complicated. It can also provide biased benefits to the cardholder. So, to fight these shortcomings, merchants should speak to every step of the process with the understanding that, fairly or not, a load of proof ultimately rests with them.
Let’s jump into each step, its challenges, and the best habits to stay ahead in the race.
A fight initiates when the cardholder throws a challenge a transaction with their issuing bank. Each transaction represents an unconnected potential dispute. If more than one transaction is in question, many disputes may be filed.
In this step, a refund will be issued on a condition to the cardholder. The issuing bank will issue a chargeback, debiting the merchant’s acquiring bank for the complete full amount of the authentic and original transaction, along with any applicable fees. The acquirer then regains the funds from the merchant. The issuer also provides a chargeback reason code, which is meant to explain the actual reason for the dispute.
CHOOSING TO FIGHT
You must decide to either react to the credit card dispute or simply accept the loss. If you choose to fight the chargeback, you need to start working as soon as possible to combine the documentation you need to prove your case.
THE REPRESENTMENT PACKAGE
You have to prepare your answer to a credit card dispute or chargeback. The documentation you require for this process may include compelling proofs, along with a rebuttal letter and other documentation, which you must give to your acquiring bank
FINAL REVIEW & SUBMISSION
At this point, the acquiring bank will give ahead of the chargeback dispute information to the issuing bank. The issuer will then look through the information, comparing it to the statements and claims made by the cardholder.
After you re-present the transaction, three things will be in the process:
- You win: Your claim is validated by the issuing bank. The funds are gathered from the cardholder’s account and transferred back to you.
- The cardholder wins: The bank confirms the chargeback, and the funds are not returned to your account.
- You win, but a second dispute is filed: The issuer has the right to file a chargeback again for the same transaction. Reasons for a second filing might include the invention of new information or a switch of the reason code.
What Makes Credit Card Dispute Resolution So Intricate?
Anything with a ton of bulk is going to end up running into trouble.
Credit card dispute resolution, also known as the chargeback resolution process, includes multiple different parties. From the first customer complaint through arbitration, there are multiple key players involved, including:
- The Cardholder: The holder of the card is involved in a transaction.
- The Merchant: The party who sells the goods or services being disputed.
- The Issuer: The bank who issued and hand over the card to the cardholder.
- The Acquirer: The bank is tasked with acquiring payment on the merchant’s behalf.
- The Card Network: The card brand (Visa, Mastercard, etc.) that looks after the process.
For merchants, a dispute requires input at every stage of the process. It applies severe timelines and resolution development that is anything but linear. To make matters ill and sad, each provider is going to have its own set of rules and regulations regarding disputes. These factors can further confuse or mess up a system that is already inherently cursed by the flaw in several ways. It’s:
- Subjective: The result of each credit card dispute is determined by humans that issue judgments as they see fit.
- Outdated: The Fair Credit Billing Act (FCBA) was asked in a pre-internet era. The system is no longer favorable to an increasingly digital global marketplace.
- Fallible: Banks operate under the guess that the customer is always right. This makes the dispute resolution process one-sided.
- Vulnerable: The ease of credit card dispute resolution for cardholders can lead to elevated levels of friendly fraud and other dishonest practices.
- Damaging: Merchants either go under, or increase prices to alleviate losses, and cardholders end up paying more while having fewer choices.
It’s a fact that this process contains a few problems. At this point, though, it’s the only system available to look for the result in credit card disputes.
All is not lost, however; disclosing the many flaws built into the dispute process can majorly improve your ability to control them. Understanding how best to direct the dispute process can save merchants both time and money, and better prepare their businesses for your extravagant win. Knowledge, as they say, is power.
6 Easy Tips to Overcome Basic Merchant Dispute Challenges
As we have seen and spoken about, the issuing bank is not on your side. The cardholder is their customer. It becomes the issuer to convince the cardholder’s claim by commencing a dispute. So, who’s on your side in the credit card dispute resolution process?
Chargeback Expertz are.
Below, we’ve tips that can help you delete the issues in the dispute process and improve your odds of successful credit card dispute resolution:
KNOW THE RULES
It’s tough to resolve disputes in your favor if you don’t understand the system very well. Bank and card network rules and regulations keep on changing, so keep tabs on all updates.
Having quick access to the right documentation is necessary. You’re on a strict deadline; it’s important that you can recollect the information you need right away when you need it.
KNOW THE REASON CODES
Each network or payment service has its own set of chargeback reason codes. Even in friendly fraud cases, your response needs to direct the given chargeback code.
ONLY FIGHT WHEN APPROPRIATE
You can’t fight chargebacks that result from real criminal fraud or merchant error. Only try to do so if you know it’s a case of friendly fraud.
TAKE A “HANDS-ON” APPROACH
Depending on automated tools for chargeback responses won’t deduct it. You need human instinct to compress strong cases for each dispute.
Be sure you’re tracking the right key performance indicators (KPIs). Regardless of whether you win or lose a dispute, keeping an eye on your success will help refine processes and build better strategies.
The Coming Step: Professional Credit Card Dispute Resolution
There are a lot of obstacles throughout the credit card dispute resolution process. To mess up matters further, chargeback regulations are kept on changing. Is it any wonder that balancing chargebacks and dispute resolution can be an all-time job
Gratefully, it’s not a task that you have to do alone. Hiring a Chargeback Expertz can make a major difference in your success rate and keeping chargeback ratios low. If your business is on the receiving end of an N number of chargebacks each month, then expert and professional assistance and direction might be what you need. The solution is just a step ahead.