What is a chargeback?
A chargeback is a transaction disputed by the cardholder or card issuer. There are many reasons for chargebacks, but the most common are returned merchandise, terminated services, disputes, errors, or fraud. Merchants must be able to provide proof that the disputed transaction is valid and in accordance with Visa/MasterCard regulations or risk having their account debited for the disputed amount.
Up until recently after the ‘Clear Copy Request’ process, if the cardholder denies purchasing a good or product through his card and the merchant has no proof of delivery or authorization in writing, then Visa, MasterCard and American Express will charge the dollar amount of the transaction to the merchant. Under the Merchant Agreements with Visa/MasterCard /Amex, they do not guarantee non-face to face credit card transactions, even though the original transaction was approved. They will only guarantee the transaction if the merchant saw the card and has a signature from a receipt. These were the rules but ResAvenue still fought for its hoteliers in these cases and despite the fact, all internet transactions are non-face to face, the banks were willing to review each on a case-by-case basis. However, with the introduction of the latest 3 D Secure Protocol this risk of chargeback due to “Transaction Not Authorized” has been eliminated. ResAvenue has already implemented “Verified by Visa
A chargeback occurs when cardholder disputes a credit card transaction that is posted on his account. Click here to see a diagram of the process. The most common reasons for chargeback resulting disputes are: • Customer dispute over product or service quality; • Credit not received; • Improper authorization; • Fraud; • Processing error; • Inaccurate transaction information.
. Reversal of a sales transaction, initiated by the issuer or cardholder that is returned to the acquirer for resolution. When a cardholder initiates a chargeback on an Internet transaction, the card issuer is obligated to refund them immediately on the full charged back amount. A cardholder has 180 days to initiate a chargeback. The online merchant is liable for this money.
