Chargeback Challenges for Issuing Bank – We know chargeback can be stressing for the merchant and it gets really difficult to run a successful business if you can’t handle the chargeback. But the same goes for the bank involved in the chargeback process. Now generally there are two banks involved when a chargeback is dealt with- an acquiring bank and an issuing bank.
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When a chargeback is filed, customer and merchant never respond to each other directly. One reports to the bank and the bank transfers the information to the other. When a chargeback is filed a merchant and the issuing bank face the most difficulties. Here you can find the Chargeback Challenges for Issuing Bank in detail.
Issuing Bank and Acquiring Bank
You should know the difference between the issuing bank and the acquiring bank. Also, get details about how these banks are involved in the chargeback process and then we can move to the Chargeback Challenges for Issuing Bank.
- Customer’s Bank, the financial institution that handles the customer credit and debit card transaction.
- The issuing bank manages the transaction of the customer from their account to the merchant’s account.
- They also issue the credit card to the consumer on behalf of the card network such as Visa or MasterCard.
- It basically works on behalf of the consumer and carries out the transactions.
- The consumer informs the issuing bank in order to file dispute or chargeback.
- Merchant Bank, the financial institution that handles credit and debit card transactions of a merchant.
- After a successful payment, the acquiring bank gives a successful transaction report to the merchant.
- Moreover, it is also responsible to generate the payment receipt.
- When a chargeback report is filed, the issuing bank notifies the acquiring bank about the chargeback.
- And then the acquiring banks transfer the chargeback report to the merchant.
- The merchant also has to pay the chargeback fees to the bank, disregarding the fact whether the dispute is won or lost by him.
Challenges Faced by Issuing Bank
As the chargeback rules are recently updated, it has added more chargeback Challenges for Issuing Bank. For banks, the chargeback is not as easy as you think. Also, the bank knows that their customer had made a mistake but they need to follow the rules. But in the process, they can lose the customer. Similarly, there are more chargeback challenges for Issuing Bank. Here are some noteworthy points.
- For any bank, the cardholder or account holder is the most important asset.
- And they also want their customer to use the cards provided by their bank in order to earn a profit.
- Now, if a customer feels like a chargeback method is not working for them then they will switch to other methods of payment like a cash transaction.
- This could result in loss of the bank as the consumer is not using a bank’s services.
- There are many customers who are not aware of the laws of chargeback.
- They things chargeback is the method to get their money back when they do not like a product they purchase.
- Which is wrong, chargeback can be filed under certain circumstances only that are when the merchant cheated you.
- But, many do not understand this case and ends up doing friendly fraud.
- There is also such a customer, who uses the law chargeback to cause fraudulent activity.
- In such cases, the issuing bank needs to take action that is right by the law.
As we know, no system or law is fraud-proof. The same goes for the chargeback. And this is one of the major Chargeback Challenges for Issuing Bank.
Chargeback Affects the Profits of Issuing Bank
As we discussed the customer is the highly valued asset for the banks. But there are factors that also get affected that need to be dealt with more to the Chargeback challenges for Issuing Bank.
- As the number of chargeback increases, the chargeback management charges also increase.
- And sometimes these charges exceed the hidden dispute charges that bank have to bear.
- As, if the customer lowers the card usage then business can be badly affected afterwards.
- It is important to resolve the chargeback and issuer-merchant collaboration can help to resolve chargeback faster.
We provide specialized help to the merchants to understand the entire chargeback process. You can get the help with the best Representment. Also, avoid chargeback with our highly praised chargeback alert system. For all these services, simply contact at the toll-free number of the Chargeback Expertz. You can also get an expert by contacting us via Skype, simply visit chargebackexpertz.com