The Chargeback Representment Process Explained

Sydney VaccaroChargeback BasicsLeave a Comment

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The chargeback representment process is the part of the dispute lifecycle when a merchant receives and responds to a customer dispute.

The chargeback representment process is the part of the dispute lifecycle when a merchant receives and responds to a customer dispute. We will go over what options merchants have after receiving a dispute, the tips for making a great response document, and some of the time limits associated with this part of the process.

If you would like a full overview of the whole dispute process you can check out The Chargeback Process: Explained here.

The Chargeback Representment

Process Receiving the Customer Dispute

When a cardholder disputes a charge with their issuing bank, the merchant receives the news from their processor. When the merchant receives the dispute there are two options:

  1. Accept the dispute. This means that the dispute process ends there. The merchant will lose the revenue from the transaction and the merchandise or service.
  2. Respond to the dispute. To respond to a dispute a merchant must put together evidence based on the specific reason code and transaction modifiers to prove the customer dispute is invalid. If the merchant wins the dispute, the revenue from the transaction will be returned to the merchant.

Response Time Limits

Merchants and cardholders both have time limits when it comes to disputes. These time limits for disputing charges and submitting responses are dictated by the card networks. A general rule for merchants is to submit their response is within 30 days. But merchants will want to respond to disputes as quickly as possible for a couple of reasons. First, if the 30-day response window has passed merchants will automatically lose the dispute and revenue. The second is the faster you respond, the faster the outcome of the dispute will be decided. This means less time with lost revenue.

Creating a Dispute Response

Okay, so you have decided to respond to the dispute. What now? The first step is to look at the reason code and transaction modifier associate with the dispute. This will help guide you when gathering compelling evidence for the response.

What is a Reason Code?

Reason codes are provided in a chargeback notification as a means of explaining the cause for the dispute. They are created by the major card networks: American Express, Discover, MasterCard, and Visa. Other payment service providers, like Braintree, Stripe, and PayPal, have their own categorization of reason codes. However, the disputes themselves are still categorized by the issuing bank based on the card network issuing the payment card.

The codes provide understanding into why a specific dispute occurred and detail what specific documentation can be provided by a merchant who wants to challenge a dispute. A response is most powerful when the compelling evidence is provided as directed by the specific card network rules and regulations.

What is a Transaction Modifier?

A transaction modifier represents specific circumstances associated with a transaction that changes what compelling evidence is required to overturn the chargeback.

For example, Visa reason code 83 is one of the reason code with several modifiers with which it’s associated. Reason code 83 represents a chargeback categorized as Fraud - Card Not Present Transaction. CNP transactions can be everything from digital goods to airline tickets. Because of this Visa required additional compelling evidence that is directly related to the industry type of the transaction.

Finding Compelling Evidence and Creating a Response

To start to draft your response you will want to use the dispute transactions reason code and transaction modifier(s) as a guide to the gathering evidence. The goal of the response is to disprove the claim the cardholder is making. If you receive a “Merchandise or Service Not Received” dispute the goal of the response is to prove the customer actually did receive the merchandise or service. Most reason codes have varying compelling evidence so each response document will vary from each other.

Unfortunately, there is not any one size fits all response. If you need help drafting your dispute responses you can check out our how to create a response blog post or our customizable response templates.

Tips for a Successful Chargeback Representment

  1. Stay on top of incoming disputes. It is important to set up a system to keep track of incoming dispute, assign them to be respond to, and show when a response is submitted. Merchants only have a limited time frame to responded to disputes. Any dispute that doesn’t get responded to, the merchant will automatically lose. By implementing a system that helps track this process it will make sure no disputes fall through the cracks.
  2. Respond to every dispute. The most ineffective response is no response at all. Any response that goes unresponded to is automatically lost for the merchants. This means that is an automatic loss of revenue and merchandise or services. By responding to every dispute merchants will have the best chance possible to gain back any possible revenue.
  3. Be familiar with the rules. Reason codes give you meaning and an understanding of why a specific chargeback occurred and, most importantly, detail what specific documentation can be provided by a merchant who wants to challenge the dispute. Creating a response with the exact compelling evidence as directed by the specific card network rules and regulations will be the most powerful.
  4. Pay attention to reason codes. Tracking what reason codes your company receives can help you see important insights. If there are a lot of disputes coming from specific reason code or reason code category there is something that needs to be fixed. Looking at recurring reason code patterns can give you an idea of where there is a lack of dispute protection. For example, if you receive a lot of “goods or services not as described” disputes then you may want to look at your product descriptions or product pictures.
  5. Track outcomes. Keep track of your dispute wins and losses. This can give merchants an idea where you are losing revenue, where successful responses are working, and where improvements need to be made.

The chargeback representment process is the part of the dispute lifecycle when a merchant receives and responds to a customer dispute. We will go over what options merchants have after receiving a dispute, the tips for making a great response document, and some of the time limits associated with this part of the process.

If you would like a full overview of the whole dispute process you can check out The Chargeback Process: Explained here.

The Chargeback Representment

Process Receiving the Customer Dispute

When a cardholder disputes a charge with their issuing bank, the merchant receives the news from their processor. When the merchant receives the dispute there are two options:

  1. Accept the dispute. This means that the dispute process ends there. The merchant will lose the revenue from the transaction and the merchandise or service.
  2. Respond to the dispute. To respond to a dispute a merchant must put together evidence based on the specific reason code and transaction modifiers to prove the customer dispute is invalid. If the merchant wins the dispute, the revenue from the transaction will be returned to the merchant.

Response Time Limits

Merchants and cardholders both have time limits when it comes to disputes. These time limits for disputing charges and submitting responses are dictated by the card networks. A general rule for merchants is to submit their response is within 30 days. But merchants will want to respond to disputes as quickly as possible for a couple of reasons. First, if the 30-day response window has passed merchants will automatically lose the dispute and revenue. The second is the faster you respond, the faster the outcome of the dispute will be decided. This means less time with lost revenue.

Creating a Dispute Response

Okay, so you have decided to respond to the dispute. What now? The first step is to look at the reason code and transaction modifier associate with the dispute. This will help guide you when gathering compelling evidence for the response.

What is a Reason Code?

Reason codes are provided in a chargeback notification as a means of explaining the cause for the dispute. They are created by the major card networks: American Express, Discover, MasterCard, and Visa. Other payment service providers, like Braintree, Stripe, and PayPal, have their own categorization of reason codes. However, the disputes themselves are still categorized by the issuing bank based on the card network issuing the payment card.

The codes provide understanding into why a specific dispute occurred and detail what specific documentation can be provided by a merchant who wants to challenge a dispute. A response is most powerful when the compelling evidence is provided as directed by the specific card network rules and regulations.

What is a Transaction Modifier?

A transaction modifier represents specific circumstances associated with a transaction that changes what compelling evidence is required to overturn the chargeback.

For example, Visa reason code 83 is one of the reason code with several modifiers with which it’s associated. Reason code 83 represents a chargeback categorized as Fraud - Card Not Present Transaction. CNP transactions can be everything from digital goods to airline tickets. Because of this Visa required additional compelling evidence that is directly related to the industry type of the transaction.

Finding Compelling Evidence and Creating a Response

To start to draft your response you will want to use the dispute transactions reason code and transaction modifier(s) as a guide to the gathering evidence. The goal of the response is to disprove the claim the cardholder is making. If you receive a “Merchandise or Service Not Received” dispute the goal of the response is to prove the customer actually did receive the merchandise or service. Most reason codes have varying compelling evidence so each response document will vary from each other.

Unfortunately, there is not any one size fits all response. If you need help drafting your dispute responses you can check out our how to create a response blog post or our customizable response templates.

Tips for a Successful Chargeback Representment

  1. Stay on top of incoming disputes. It is important to set up a system to keep track of incoming dispute, assign them to be respond to, and show when a response is submitted. Merchants only have a limited time frame to responded to disputes. Any dispute that doesn’t get responded to, the merchant will automatically lose. By implementing a system that helps track this process it will make sure no disputes fall through the cracks.
  2. Respond to every dispute. The most ineffective response is no response at all. Any response that goes unresponded to is automatically lost for the merchants. This means that is an automatic loss of revenue and merchandise or services. By responding to every dispute merchants will have the best chance possible to gain back any possible revenue.
  3. Be familiar with the rules. Reason codes give you meaning and an understanding of why a specific chargeback occurred and, most importantly, detail what specific documentation can be provided by a merchant who wants to challenge the dispute. Creating a response with the exact compelling evidence as directed by the specific card network rules and regulations will be the most powerful.
  4. Pay attention to reason codes. Tracking what reason codes your company receives can help you see important insights. If there are a lot of disputes coming from specific reason code or reason code category there is something that needs to be fixed. Looking at recurring reason code patterns can give you an idea of where there is a lack of dispute protection. For example, if you receive a lot of “goods or services not as described” disputes then you may want to look at your product descriptions or product pictures.
  5. Track outcomes. Keep track of your dispute wins and losses. This can give merchants an idea where you are losing revenue, where successful responses are working, and where improvements need to be made.