Chargeback Notifications By Type Explanation

Table of Contents

1. Look for signs your customer might file a chargeback
2. Copy requests and retrieval requests
3. What are chargeback alerts?
4. Chargeback notifications from a payment processor 
5. What is a chargeback notification?
6. What are the 3 sources of chargebacks?
7. What’s the difference between a chargeback and a refund?

No merchant likes getting hit with a chargeback, but when one is coming your way, you want to know about it as soon as possible. Once the chargeback process begins, the clock starts ticking down on the time you have to respond, even if you haven't been notified yet. Gathering the documents and records you need to fight a chargeback can take a while, so the earlier you can start preparing, the better.

There's more than one way to find out about a chargeback, and a lot of it depends on the acquiring bank you work with. Knowing how to anticipate chargeback notifications, where to look for them, and what options are available for getting early warnings can keep you from scrambling to put together a last-minute defense.

Merchants who handle chargebacks in-house, especially those without a dedicated chargeback team, can often find themselves missing deadlines or losing cases because they didn't have enough time to put together the best possible case. While outsourcing chargeback management is one solution to this problem, merchants who aren't ready to take that step should have a thorough understanding of the different types of chargeback notifications and how they work.

Look for signs your customer might file a chargeback

The best way to find out a chargeback is coming your way is from the customer themselves. Many chargeback reason codes stipulate that a customer must attempt to contact the merchant and resolve their issue directly with them before a chargeback can be initiated. Unfortunately, not every customer abides by this rule.

Those that do, however, are providing merchants with an opportunity to head a potential chargeback off at the pass, or, at the very least, giving early warning that they're likely to end up filing a chargeback.

Most of the time, your best option is to work with a customer to resolve whatever issue they have to their satisfaction. After all, a refund is always cheaper than a chargeback would be, and it doesn't negatively impact your merchant account like a chargeback does.

Every chargeback brings you closer to those crucial chargeback thresholds, but refunds don't have any extra negative consequences beyond the funds you return.

While it's not uncommon for merchants to want to micromanage a bit, especially when it comes to things that directly affect revenue, it's often best to give employees handling customer complaints some leeway to issue refunds that might be outside your official return policy if it seems likely that the customer will file a chargeback if denied a refund.

Of course, if the chargeback is illegitimate you can still fight it and recover your revenue, but that option has costs and consequences of its own. You should carefully weigh the risks and benefits of each option when deciding how often to reject a customer's request for a refund.

When you can't come to an agreement with a customer, especially if they seem angry or upset, it's not uncommon for them to then dispute the charge with their bank. Depending on what the customer's issue is and how honest they are with their bank about that issue, the bank might still reject the customer's chargeback request. However, it's a good idea to prepare for a chargeback by putting together the documents and information you'll need to counter the customer's claim.

Copy requests and retrieval requests

One of the first indicators you might receive that a chargeback is headed your way is a retrieval request. Retrieval requests may also be referred to as copy requests or soft chargebacks, but don't worry too much about the term chargeback being included. A retrieval request means an actual chargeback hasn't happened yet, and there's still time to prevent it.

When a customer disputes a charge with their issuing bank, the bank can optionally send a retrieval request to the merchant's acquirer via the card network.

If the acquirer has sufficient transaction information, they may respond to the retrieval requests themselves, with or without notifying the merchant. If they don't, they may pass on the request to the merchant for a response.

Some of the information that might be solicited by a retrieval or copy request includes: 

• Receipts
• The cardholder's name and account number
• Authorization codes or confirmation numbers
• Shipping and delivery dates

If the information provided is sufficient for the issuing bank, the chargeback will be denied. If not, you can expect to see the chargeback debit hit your account shortly.

Retrieval requests are currently in the process of being phased out by the major card networks. However, this is usually because there is some new system in place that fills the same role. For Visa transactions, Order Insight allows banks to obtain transaction information from participating merchants automatically, without requiring the merchant or their acquirer to see the request and respond. Mastercard's Mastercom system performs a similar function.

When a merchant receives an alert, the chargeback is put on a temporary hold, giving the merchant a chance to issue a refund if they so choose, thus avoiding the chargeback.

The merchant still has the option to allow the chargeback to stand so that they can fight it. Verifi and Ethoca are two of the major companies that offer chargeback alerts.

No chargeback alert company has a relationship with every existing issuing bank, so they aren't able to intercept all chargebacks — just those that originate from the banks in their networks. Some chargeback representment companies act as alert resellers, providing a single portal to receive and respond to both Verifi and Ethoca alerts. This gives merchants the most comprehensive chargeback alert coverage available, but also results in duplicate alerts from banks that are signed up with both networks.

Chargeback alerts also come with fees of their own, so they're not the best option for every merchant. However, they do allow a merchant to prevent a significant percentage of chargebacks, which can be especially useful for merchants that are classified as high-risk or are in danger of becoming classified as such due to a high chargeback ratio.

Chargeback notifications from a payment processor 

When a chargeback is filed against a merchant, their payment processor will notify them. Depending on the options offered by the processor and the merchant's preference, these chargeback notifications may be sent via email, fax, an online portal, or even through the mail.

Having access to an online chargeback notification portal is one of the best ways to be instantly notified of your chargebacks, ensuring you have time to analyze the situation and decide on a course of action.

Remember, every chargeback has a deadline, and the representment documents must be submitted to your payment processor before the deadline, or else you lose your chance of defending your case. If you don't have access to an online portal, ask your processor if that option is available. Sometimes it’s not offered to merchants by default.

FAQ

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