What is a Chargeback?
A “Chargeback” is the return of funds to a customer. Any customer who has used a card to pay for goods or services from your business, can use the charge back system. Chargebacks differ from refunds in the sense that, instead of contacting you for a refund, the customer bypasses both the yourself and the merchant services company and asks their bank to forcibly remove funds from your account. If your customers bank approves the request, then full amount of the transaction will be moved from your bank account and returned to the customer.
As a business, for every chargeback you may receive, you are also hit with a non-refundable chargeback fee from the merchant’s acquiring bank. Chargeback fees range in every situation. The amount charges often depend on the goods or services that were offered. The acquiring bank has a voice in determining the amount, as does the processor. The fees can range between £20 and £50. If your business is considered as a ‘high risk’ merchant, you may be at risk of higher fees.
When should a consumer make a chargeback?
You can apply for a chargeback under several circumstances, including:
• if you do not get the goods or services you paid for, including if the company has gone out of business
• if goods or services turned out to be faulty, counterfeit or defective (you will need to return the goods in order to get a refund in this case)
• if you are charged the wrong amount, or charged twice by mistake
• if you are charged for a repeat payment after cancelling a subscription
Is there a time limit as to when your allowed to claim for a chargeback?
Chargebacks should be claimed for as soon as there is a problem or if you are concerned about a transaction. Typically, the chargeback process starts within 120 days from the purchase date or when the goods were meant to be received.
What information should you have while claiming for a chargeback?
• the name of the retailer you have paid money to
• the date you paid the money and how you paid it (in store, over the phone or online)
• a detailed description of the goods or services you paid for (e.g. colour, brand, size of goods) and estimated delivery dates
• what has gone wrong with the goods or services delivery
• proof of the return of goods to the retailer if they are faulty
• if you know that the retailer has gone out of business, you should direct your card issuer to their website (where there will likely be a message from its insolvency practitioner)
• Invoices
• receipts
• correspondence you have had with the retailer when trying to fix the problem