Chargeback reversals can be a complex affair, requiring merchants to have detailed evidence to hand, as well as time and resources to make their case to the banks. Give your organisation the best chance of successfully overturning unfair chargeback requests, by better understanding the reversal process, along with tactics to ensure issuing banks — who ultimately cast the final judgement — look favourably on your case.
Wondering what a chargeback is? Read our guide on how to reduce chargebacks first.
What is a chargeback reversal?
A chargeback reversal is when an issuing bank decides that, on balance and after investigation, a chargeback was either unfair or fraudulent. The transaction funds will then be returned to the merchant.
When a customer disputes a charge, banks tend to favour customers over merchants, even though the consumer is meant to provide evidence in support of the chargeback. Unfortunately, this low barrier means chargeback fraud or friendly fraud happens regularly. In fact, it’s estimated that as much as 86% of chargebacks are probable cases of fraud.
If a bank decides to file a chargeback, they will notify the merchant via their acquirer. The merchant is then presented with the option of examining their records to see if the reason code for the chargeback is valid. If the merchant has reason to believe the chargeback reason is invalid, they are permitted to dispute the chargeback through a process called representment.
What is chargeback representment?
Representment involves a merchant gathering all available information on the disputed transaction, such as receipts, delivery confirmations and any other documentation, which together can prove the transaction didn’t warrant a chargeback. It is then up to the bank to decide whether to honour the chargeback or issue a reversal.
It’s important to note that, even if a chargeback is successfully reversed, the merchant is still liable to pay the chargeback fee, which is usually around £10-20.
Having a high chargeback rate can lead to further consequences for merchants, as they may be subject to penalties and monitoring programmes by card schemes, such as Visa and Mastercard, if their chargeback rate exceeds 0.9%. So representment is an important skill for businesses to master.
Tips for successful chargeback representment and reversals.
In order to be successful in your pursuit of a chargeback reversal, it can be useful to follow some straightforward tactics:
1. Only pick chargebacks that are clearly unfair
There are several reasons why a customer can make a chargeback request, including:
card processing errors, such as being charged multiple times for the same purchase
the cardholder doesn’t recognise the transaction
merchandise or service differs from the description
received goods are defective
ordered goods aren’t received
agreed upon services did not take place
the seller has gone out of business, and so the customer cannot request a refund
When reviewing a chargeback, can you see that any of the above did happen? If so, don’t fight the chargeback request. That was a valid chargeback request, and submitting representment will only make it more difficult to persuade the issuing bank in the future.
2. Flag and analyse chargebacks quickly
Chargebacks are typically sent to your business by email or post and come with strict deadlines for submitting a case for reversal — often 30-45 days — so it’s important to spot these notifications quickly and start uncovering the details of the transaction. Late reversal submissions will be automatically rejected by the issuing bank, regardless of how strong your case is.
The next step is to check the reason code for the chargeback. Visa and Mastercard have their own exact reason codes, but all will give you information on why the customer requested the chargeback, including customer disputes, fraud, authorisation errors and processing errors. Midigator has an extensive database of chargeback codes.
3. Gather evidence and build your case
With the reason code giving you the cause of a chargeback, you now need to gather all the information you have on that particular transaction, so you can find evidence that contradicts that reason code. For example:
If a customer claims a product was never delivered, find proof of delivery.
If a customer claims they were charged multiple times, look for that customer’s transaction history.
If a customer claims merchandise differs from the description, provide evidence of clear and detailed product descriptions.
Evidence will likely be stored in different places across your organisation. Typical places to gather evidence include:
CRM software (eg Hubspot or Salesforce): here you should be able to find customer information, product/service details and browser information
Website or apps: this is where you’ll find terms and conditions, plus screenshots of how your product or service is presented to the customer
Payment gateways: here you’ll find specific payment data, including payment authorisation codes and 3D secure information
Customer support apps: this is a good place to find any history of direct interaction with the customer. Did they reach out for help before submitting a chargeback request?
4. Submit your case to the issuing bank
Once you have gathered all the evidence you need to be satisfied that the chargeback was invalid, whether through fraud or simply a mistake on the customer’s part, you should submit your proof in the form of a rebuttal letter.
It’s important to include all the case-specific information you have gathered but banks will have their own processes that may include providing specific supporting documents, so check you’ve included everything they have asked for.
And remember, the contents of your case will be read by your bank, the issuing bank and potentially even your customer. Make sure you keep the tone professional throughout and don’t be tempted to say anything disparaging about the customer concerned.
Finally, state what you want the outcome to be. It may be obvious to you that you want the chargeback request to be overturned, but make sure the bank knows exactly what you expect.
5. Analyse your successful (and unsuccessful) reversal attempts
Over time, if you submit enough chargeback rebuttals, you will be able to analyse where you are likely to get the chargeback successfully reversed. There could be certain reason codes where your case is always dismissed, or issuing banks that reverse the chargeback more than others.
Assuming you don’t have time or resources to fight every chargeback effectively, focus your efforts on the chargebacks where you have seen success in the past. Tactics like highlighting different pieces of evidence or modifying your cover letter could help improve win rates where your cases are often dismissed.
Eliminate the chargeback process with open banking
With card payments, chargebacks will always be an issue for merchants. Chargebacks were originally intended to encourage consumers to use cards, but high fraud rates have turned them into a headache for businesses. Some payment processors even offer chargeback protection insurance.
Open banking payments — or instant bank transfers as they’re often called at checkout — offer a payment method that’s tailor-made for ecommerce. TrueLayer’s Payments API enables shoppers to pay instantly in a few clicks, with strong customer authentication seamlessly baked into the user experience. And with no card network involved, there is no chargeback process to manage.