Member Benefits

Resolving disputed credit card transactions

by Kimberly Layton of First Horizon Merchant Services

Most of the time your transactions move smoothly through the system, and are processed with few problems. Occasionally you will be required to provide additional information about a transaction in order to resolve a dispute. The card associations have procedures in place to facilitate the timely resolution of disputes. Your part in this process is very important.

Basically there are two items that will signal a cardholder dispute:
1. Retrieval Request
2. Chargeback

A retrieval request is simply a request from the bankcard processor to a merchant for information and documentation related to a specific credit card transaction.

This information is requested to be supplied within a specified time. The merchant’s compliance with a retrieval request is critical. When a request goes unanswered a fee is levied against the merchant by the bankcard processor. The next action is that of the card holder to then charge the transaction back if no supporting documentation of proof of the transaction is provided.

A chargeback is the dispute of a credit card transaction that appears on a card holder’s month end credit card statement. If the card holder does not recognize the charge they will normally contact the issuing back of their credit card and request that the charge be reversed or charged back to the merchant. Not all chargebacks mean a lost sale however. If the merchant is able to provide supporting information such as a signed transaction receipt, the information is heavily scrutinized by Visa/MasterCard in considering the best remedy for the situation.

Merchants are notified of a chargeback by their credit card processor. The processor receives notification of a chargeback or retrieval request from the issuing bank of the credit card. When the chargeback information and documentation are prepared and ready to be mailed or faxed a merchant is directed to send it to their credit card processor. The processor’s chargeback department will then send this information to Visa or MasterCard for a resolution. A decision is generally sent back to the processor within 30 days. The processor will then notify the merchant.

In the event that a chargeback dispute is decided upon by Visa/MasterCard in favor of the merchant, the merchant will receive the funds back for that transaction however the fees associated with the administration of the chargeback are not refunded typically.

Good communication with your customers can help avoid chargebacks. Along with informing customers of any changes or delays related to a sale. When issuing credits, do so promptly and always be clear about the return and exchange policy.

By keeping accurate records and following established procedures by Visa/MasterCard merchants can minimize exposure to retrievals and chargebacks.

For more information on this and other issues concerning bankcard processing, call First Horizon Merchant Services and mention your membership with the association at 1-866-638-8614.

Reprinted from Floor Care Professional, July 2007