Did you know that the cost of chargebacks is expected to go from $690 million in 2020 to more than $1 billion by the year 2023, in the United States? If you are a new business and are new to the world of credit card chargebacks, we are here to help you learn the ins and outs of chargebacks.
Read on to learn more about how they work and how you can help your business in this situation.
How Does a Chargeback Work?
The typical process of a chargeback begins with a purchase a customer makes with their credit card from your business. Once the transaction is processed then the business receives the funds.
Next, the customer sees the transaction on their credit card, and for one reason or another, they contact their credit card company and file a chargeback for the transaction. The chargeback process begins and the bank that issued the credit card initiates the process.
This is where the issuing bank will reach out to the merchant bank asking for any documentation to dispute the chargeback. Typically the issuing financial institution will grant the dispute to the customer and pull the funds from the business and return them to the customer because the business does not provide the documentation on time.
If the business provides documentation to dispute the chargeback, the issuing bank will evaluate the evidence. Then they will make a decision about the chargeback being valid or not.
There are several ways to avoid your business losing money from chargebacks. One way is to promptly answer the bank with your dispute documentation so that they can further investigate the validity of the chargeback. Keep in mind that in order to answer promptly this will entail having a very organized system of receipts, emails, etc.
Another solution to reducing chargebacks is using an RPA solutions provider. This will complete your dispute resolution process automatically through robotic process automation. Thanks to technology bots can research and obtain key documents to validate claims.
If a bot finds a claim to be invalid then it will immediately issue a dispute claim. This will avoid you having to manually do all of the work. This is definitely the way to go if you want to save time and money.
How Long Is the Process?
The time for a chargeback to be resolved can vary between a few weeks to 75+ days. Keep in mind that this is a much longer process than a refund, which takes between 3-7 business days.
Some chargebacks take long because of the back-and-forth disputes with the banking establishment.
Feeling Like a Credit Card Chargebacks Pro?
We hope that now that you are aware of the process for credit card chargebacks, you are feeling better equipped if your business is dealing with any at the moment.
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