I mean, do they just have to call their credit card company and complain or is it a longer process?
There's a customer service period but Visa and MasterCard have a zero liability for CNP ecommerce transactions, which means all you have to say is "I didn't do it," and its filed as thus.
Visa reason code 75
MasterCard reason code 4837
Some banks put their cardholders through a reporting process, but the way each bank deals with it is different. But there are some banks that will just process it immediately.
It all depends. Some issuing banks have different processes & procedures. Plus the limit is usually 6 months, however, I have seen it as little as two months for some issuing banks for Visa & MasterCard and as long as 18 months for American Express. Plus if you do a yearly transaction, then that transaction has six months after the service is rendered as well. This is why some processors do not allow or frown on yearly subscriptions.
I just wrote a seven page article about chargebacks for sitepoint that goes into great detail about how chargebacks work. Hopefully they will publish it soon.
Basically, the card holder calls their bank to file a dispute on charge and the process has started. Now this doesn't mean they are getting their money back automatically. They will get a temporary credit until the dispute is resolved. In the meantime, their card issuing bank will contact your processing bank and notify them of the chargeback. Your bank will then review it and, most likely, contact you requesting more information about the chargeback. At this point you should provide them with any information you have about the sale that shows it is indeed legitimate (you gave them what they asked for). Hopefully you have good documentation to back up your sale. If so,you get to keep your money. Otherwise, kiss it goodbye.
Check cards have a limit of two months for chargebacks. Visa and mastercard credit cards is usually 6 months. American express seems to honor them forever.
Filing a chargeback is easy and people do them all the time even when they really did make the charge. All a consumer needs to do is to not remember making a charge and they will file a chargeback. It is then up to you to either convince them that they really did make the charge and then get them to wothdraw the chargeback, or you have to prove to the bank that this was a valid charge - usually by showing them a signed sales reciept.
In the first case, we have sometimes been able to remind people about the charge and convince them to withdraw their chargeback.
In the second case, we have never won. We have had IP address, maling address, name, phone number, and classified ad content that mentions their name, address, and/or phone number. Even so, without that signed sales slip, we lose the challenge. Obviously, the legitimate ones we don't challenge and just eat the loss.
I have them check a box before ordering agreeing to my Terms. It clearly states no refunds, etc. Could they still chargeback if they agreed to this?
Yes. You can't prove it was the cardholder that checked those terms.
Definitely. Let's see - that was not me, I didn't do it. Most of the issuing banks do not even read the terms of service. Maybe I bought something & it just was not what I expected. I can tell that to the issuing bank and chances are - I will get my money back.
Always good to make sure you have your contact number everywhere & maybe even put a blurb on your invoice that you send to them - Please contact us for any problems ot questions. And make sure you have a number that is displayed on the consumer credit card statement
I personally have never won a chargeback and have contested 10+. I provide everything they ask, tracking # etc to prove it was shipped and delivered to card holders address, yet never win.
In fact, my merchant account now withdraws the money from my bank account for a chargeback, before I even receive the notice so I can contest it and to top that off the notices are usually received 2 - 3 days AFTER their supposed deadline to fax them in by.
Isn't there anything a seller can do? I call them up, yet they tell me to simply make sure I provide all relevant details etc etc. Done that, doesn't make a difference.
It seems to me, chargebacks are simply way to easy to file and the merchant provider really couldn't care less about trying to help you fight one.
I do however only get 1-3 chargebacks per month with 250-500 sales per month so I guess if you work it out the percentage isn't that bad.
Unfortunately with non-retail businesses once the chargeback is submitted they suck the funds right out and then notify you of the chargeback. Hardly seems fair but it's based on the fact that they want to be sure they get their money to cover that chargeback before the merchant skips town. Since the chargeback also always seem to be in the customer's favor it's a safe way for the bank to proceed.
Your processing bank is on your side believe it or not. They don't want you, or any of their merchants, to lose a chargeback. It's a risk for them and causes them issues that you never hear about. Plus there are the chargebacks you never hear about. You get a chargeback but your processing bank tells them to shove it because it is either a customer mistake or obvious baloney. They covered your butt and you never even knew it.
I used to use a merchant provider (cant recall their name) however they were so bad that they wouldnt even gvive us a chance to contest chargebacks- firts they would as for proof- then deny them receiving anything- then say ohh damn well here it is- then say it wasnt good enough since its electronic- despite our record log of voice confirmation with them (not that it meant anything-).
im using charge.com with linkpoint and have had nothing but good experiences so far- been using themf or about 1.5 years.
Now I am reading this topic very carefully, who knows i have to come across disputes or refunds.
Can you expand on this a bit?
Surely the seller incurs penalty charges for chargebacks? If so, these are doubtless set high enough to compensate the bank and make a profit too? In which case, chargebacks aren't a major problem to the bank, which is surely why they are so easily perpetrated by dishonest customers? The risk of a trader not refunding the bank is minimal since they need the continuing facility to run their business. Traders that don't pay up will have their account chopped and are therefore not an ongoing problem.
Or am I completely wrong about this?
The only thing banks and bank employees care about is themselves. I think the ease with which they process chargebacks simply reflects the contempt and arrogance that they traditionally display to their small business customers.
Usually a small fee between $15 and $35. This fee just covers the extra work they have to do to process your chargeback. There's no profit in chargebacks (except for the jerk making the chargeback).
It's easy because Visa and MasterCard make it easy. Especially against non-retail businesses. Didn't swipe that card through a credit card terminal or get an imprint? You've automatically got an uphill battle. The real money in credit cards is from consumers using them. Merchants have to take them to be truly successful but consumers don't have to use them They can always use cash, checks, or debit. When it comes to who is Visa and MasterCard are going to side with, it will be the consumer unless there's rock solid proof otherwise.
The risk comes from the merchant losing too much money in chargebacks and either:
1) Not having the money for their chargebacks in which case the processing bank has to eat it.
2) The chargeback puts the merchant out of business and they can't pay their fees to their bank which again loses money.
The chargeback process is dictated by Visa and MasterCard. The banks don't make up the rules. They just follow them. And they don't like chargebacks. They hate them as much as you. Whenever you lose a chargeback, it's because the factors involved dictated you lose. You bank doesn't make that call. They get negative rap about it because they are the ones you deal with. They'd rather you'd win. There's much less risk for them that way. Every chargeback is an opportunity for them to lose money.
And I work work with the processing banks everyday. Every chance they get to help out a merchant they do it. If it's a gut call on what to do, they'll do what's best for the merchant. It's not their money (I mean the employees). After all, they're human beings, not soulless robots.
Paypal is a safe bet. Care for both seller and buyer
Yeah, i agree. PayPal is one of the best ways & they realy do care about the people. 2CheckOut are also pretty good folks too.
Paypal and 2checkout will kill you with fees and they both are just as susceptible to chargebacks. They're only good if you are a small volume merchant (you do less then $1000 per month). Otherwise you are wasting your money for no benefit.
Exactly. This means that approving chargebacks automatically is the easiest and cheapest course of action for the banks/credit cards. The merchant pays, regardless.
But the banks and the credit cards are effectively one and the same thing. The credit cards were originally set up by banks and are still owned and run by banks. It's a great big private club. So actually the banks do make up the rules. Visit the official Visa site for Europe to find this, for example:
Visa International is a membership association owned by 21,000 financial institutions worldwide. We provide products, systems and services for banks and other organisations that are members of Visa. We also help to create standards for global interoperability, security and new technologies, so you can pay with Visa anywhere, any time and any way you choose.
Banks, credit cards, it's all the same. If they wanted to change the rules they would and could. But they don't. They just charge the merchant, regardless. No wonder credit card fraud is on the up and up. It doesn't cost the banks a penny to process malicious or unjustified chargebacks.
Sad to say, but in the UK at least my experience of bank staff is that they are often 'soulless robots', and not particularly helpful or efficient ones either. That's probably because jobs in consumer banking here are some of the lowest paid jobs around, and attract unambitious, mediocre people. Plus a lot of back office stuff is outsourced across the world to people earning even less, who I'm sure can process many, many automatic chargebacks for the cost of one $15 penalty.
It may well be different in your part of the world, of course.
My own opinion is that the banks/cards are quite happy to condone even fraud and criminal activity, because they can automatically recover the costs from the merchant. This doesn't seem to me a very moral course of action. But it's something we have to live with, apparently! :mad:
The recent scandal over here of the credit card companies cashing in with a full 3% commission on tens of millions of dollars of Tsunami Relief Donations to major charities - until there was a big outcry and they were shamed into refunding their windfall - shows the kind of mentality of the people who run these companies.
You didn't read my post. The bank doesn't approve or decline the chargeback. They just facilitate the exchange of information. And the amount of risk the assume with each chargeback almost always exceeds the $15-$35 they may charge for the chargeback. Heck, sometimes they can be on the hook for tens of thousands of dollars.
The banks that issue credit cards are not the ones who process them. Once again, the processing banks do not make up the rules. Visa and MasterCard do. The card issuing banks and processing banks do as Visa and MasterCard dictates. Don't like chargebacks? Blame Visa and MasterCard.
Your local bank may suck, but the processing banks work in entirely different ways. Your local bank employee is held responsible for every dollar that passes through their hands so they are pretty uptight about everything. Processing bank employees don't have the same restraints.
Saying banks like to condone fraud is quite rediculous. Fraud is the biggest problem to them. They lose billions of dollars each year to fraud. Those $15 chargeback fees don't quite cover that.
Yep, sorry, that didn't come out right - I didn't make myself clear. I'm talking in the context of a typical small business ecommerce website suffering chargebacks from dishonest or stupid customers. Not organised crime and stuff like that, or big ticket items.
It's the ease with which 'ordinary' dishonest customers can get away with ripping off a small T-shirt site or whatever, that riles me.
next page →