Chargebacks and retrievals impact all merchants’ bottom lines, even though it is not always evident on the balance sheet.
The challenge is that chargebacks and retrievals can both occur for a number of reasons, and many of them have little to do with fraud. What is important when dealing with this challenge is for businesses to have the proper systems and partners in place to protect them from losses when chargebacks and retrievals occur.
What Are Retrievals and How Can I Manage Them?
A retrieval request, also know as Request for Information (RFI), is initiated by an issuer after a cardholder disputes a transaction on their billing statement. That request is spurred by a consumer who does not recognise the transaction, does not have enough information to know if they made the purchase, is confused, or is trying to commit fraud. The consumer can also think the transaction was fraudulent or unauthorised.
When merchants receive a retrieval request, they are required by payment industry regulations to provide the necessary details about the purchase. For those that do not follow that request within 14 days of the dispute request, the dispute may become a chargeback. These rules are set and regulated by the Card Scheme.
What Are Chargebacks and How Can I Prevent Them?
A chargeback occurs when a cardholder disputes a transaction on their card issuer statement. If the cardholder’s chargeback complaint is valid and verified by the issuer, the merchant may be charged for the purchase amount for that specific chargeback case.
Common Reasons For Chargebacks
- Purchase was made with an invalid or expired card without the consumer or merchant realising it was expired.
- Cardholder was not present when the transaction was made and is disputing the transaction.
- Transaction was made fraudulently (online, by phone, or by mail).
- The merchant did not respond to a retrieval request in the required time.
- A cardholder was charged twice for the same item or service.
- The transaction was never authorised by the consumer.
- The consumer never received the goods or services as promised.
- A consumer is trying to commit fraud and avoid paying for goods or services.
- A purchase was made on an account that the consumer does not recognise.