In the field of e-commerce, a client may challenge a credit card transaction based on a processing technicality, fraudulent activity, or dissatisfaction with a service provided.
This is known as a Chargeback. When a transaction is disputed, the Issuing bank (the cardholder's bank) and the Acquiring bank (the bank providing your organization's merchant account) operate according to well-established guidelines in order to determine whether your organization or the cardholder should retain the disputed payment.
In this article:
1. What is a Retrieval Request?
A Retrieval Request is made when a cardholder or their Issuing Bank questions a transaction. A retrieval is also known as a Copy Request, Sub-draft, First Request, or a Request for Information (RFI). The goal of this procedure is to collect information before proceeding to a Chargeback.
In most cases, this is a request for a copy of the sales draft. For card-not-present transactions, Paysafe auto-responds to retrievals on an organization's behalf. For card-present transactions, an organization must provide additional information.
At this point, no funds have been returned to the cardholder. If the response to a retrieval is not timely, legible or valid, an Issuing Bank can initiate a chargeback. In some cases, banks will forego a retrieval and immediately request a chargeback.
👉 Retrieval Requests are posted in your merchant account but have no financial impact. However, administrative fees (originating from the card network, with no further upcharges) may appear on your next Amilia invoice.
2. What is a Chargeback?
A chargeback is the reversal of a credit card transaction arising from a specific problem related to fraud, product quality, customer service, refunding and/or payment processing. A client can request a chargeback up to 6 months after the transaction. This results in a loss of income and additional fees for an organization.
An organization may face disciplinary measures from card associations if it's the subject of multiple chargeback requests.
👉 Chargebacks appear as debits in your merchant account and administrative fees of 25$ (originating from the card network, with no further upcharges) will appear on the next Amilia invoice. Chargebacks do not appear in Client Billing. If a chargeback isn't disputed by your organization, please contact support@amilia.com in order to remove the payment from the client account
3. How do I know if a client has requested a Chargeback?
After a client lodges a complaint, their Issuing bank will first make a Retrieval Request, or proceed immediately with a chargeback. The client's Issuing Bank will contact the Acquiring Bank (the bank that provides your organization's merchant account), who in turn contacts Paysafe. Once a chargeback is processed, the cardholder is automatically credited and your merchant account is debited, pending investigations.
Chargebacks are not reflected in the Client Billing. Chargeback amounts only appear in SmartRec on the Merchant account page, and are listed under the 'Other' column. You will need to login to Netbanx for more details.
In Netbanx:
Click on the Reports tab and then on Chargeback History to see new chargeback and/or Retrieval Request entries in your merchant account.
Alternatively, click on the Scheduled Reports tab to schedule a report to be emailed to you on a daily basis. We recommend viewing your Chargeback history no less than twice a week to ensure you do not exceed the deadline to contest.
👉 From the date a Retrieval Request/Chargeback appears in your merchant account, you have 5 business days to formally challenge it and provide supporting documentation. Failing to do so means you forfeit the right of dispute.
4. How long does a Retrieval Request/Chargeback take?
Paysafe has internal procedures in place to inform merchants (i.e. an organization) of response times based on the life cycle of a chargeback. Each entity (Issuing Bank, Acquiring Bank, etc.) takes a segment of time to perform tasks related to receiving notifications, preparing and dispersing information to the next entity and then allotting time to receive the information back for processing as well as the next required steps.
Retrieval Requests can take up to 10 business days to complete, whereas a chargeback averages between 20-30 days.
Cardholder: The client who disputes the transaction.
Issuer: The bank that issued the client's credit card (i.e. Issuing Bank).
Card Association: The specific credit card association.
Acquirer: The bank that provides the organization's merchant account (i.e. Acquiring Bank).
5. How do I challenge a Chargeback?
First, refer to the code associated with the chargeback to find out why a client is disputing the transaction. Please refer to page 26 of Paysafe's Chargeback Management guide to view an explanation of these codes.
If your organization has documentation and evidence to support your challenge, you must send all the information to Paysafe within 5 business days from the date the chargeback appears in your merchant account. Please refer to page 14 of Paysafe's Chargeback Management guide to view which documents and formats are required to send to Paysafe via email or alternatively, a secure SFTP server.
If your organization doesn't dispute the chargeback or if the client wins the dispute, please contact us at support@amilia.com or start a chat to remove the payment from the client's account.
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