Cardholders have 120 days to file a chargeback after a purchase has been made. Chargeback reasons can vary and the Chargeback code is always shared with the merchant in the official communication.
Once a chargeback is filed, the amount is immediately debited from the merchant’s bank account. Simultaneously, the merchant receives a letter from the Processor/ Acquirer with the order details, including the amount, chargeback code, customer details, and instructions on what steps to take next, and where to send all the information.
The merchant has the option to dispute the chargeback, by following the chargeback dispute instructions. The instructions can vary. The general idea is to provide as much evidence that contradicts the cardholder’s claim. This includes but not limited to:
- (FedEx/UPS/DHL) mail slip with the customer’s signature on it
- Proof that shipped goods were not faulty or broken
- Copy of the customer’s ID card (applicable only when the merchant’s internal policy requires a copy of the ID before shipment of goods)
- Email communication prior to and post-purchase
If the chargeback is won, the amount will be credited to the merchant. However, the cardholder has the right to dispute the same amount again (2nd time). In which case the Process/Acquirer will once again debit the amount from the merchant.
Arbitration
If the same chargeback gets disputed the second time, the merchant has the option to accept it or dispute it again, by appealing to an arbitrator from the card network. Arbitration has added fees, time, and potential penalties if the chargeback is lost again.
Note: Chargebacks are always lesser with Splitit since the cardholders can only dispute the charged amounts instead of the whole purchase order amount (under pre-authorization).