Frequently Asked Questions – Credit Card Chargebacks

How does the chargeback process work?

The chargeback is initiated by either the cardholder’s issuing bank or by the cardholder
contacting their card issuing back. When a chargeback is received the merchant is mailed a
Chargeback notice letter. The merchant is given 14 days to supply a response to the
chargeback letter.

A retrieval fee is issued upon a cardholder requesting a chargeback from their card issuing
bank. The merchant is assessed the retrieval fee. The processor is then notified of the
retrieval and has 45 days to respond. From that response, the card issuing bank has
another 45 days to respond. MC/Visa ultimately make the decision – the more
documentation the merchant has – the better their chance at winning the chargeback. A
chargeback fee would be assessed to the merchant in the event the MC/Visa fine in favor of
the cardholder.

Is there a certain amount of chargebacks you are allowed to come through before you are
charged an additional amount? i.e. excessive amounts of chargebacks

All chargeback “fees” are the same. In the event of excessive chargebacks – a merchant
would likely be placed on the Visa/MC “Terminated Merchant File” (TMF) which would not
allow them to process with another processor (unless there were major extenuating
circumstances).

Are there devices (equipment) that would support someone who has excessive
chargebacks by providing fingerprints, photocopies of licenses, etc.

Typically, all of the things you mentioned could help. What mostly protects merchants is
having a signed receipt on file (securely stored), clearly stating return policies (and being
able to prove that those policies were clearly posted and provided to the cardholder),
utilizing AVS, CVV2 and four-digit prompts