Overview
This document describes chargebacks for Core merchants.
A chargeback happens when a customer disputes a transaction with their bank or credit card company, leading to a reversal of the payment.
In a traditional single-payment transaction, you may only face one chargeback for the total amount. With the Splitit installment solution, each installment is susceptible to individual chargebacks. Despite this difference, the chargeback process, including the submission of evidence, remains consistent for both transaction types.
Key Things to Know:
- Shoppers generally have 120 days to file a chargeback after a purchase is made
- The merchant owns the risk for chargebacks (except for a few anomalous cases)
- The best place to get information about your chargebacks is directly through your gateway platform
Common Reasons for Chargebacks
- Unauthorized Transactions: If a cardholder notices a transaction on their statement that they did not authorize, they may initiate a chargeback
- Non-Delivery of Goods or Services: If the cardholder paid for a product or service that was not delivered as promised, they might file a chargeback
- Dissatisfaction with a Product or Service: If a received item or service is significantly different from what was described by a merchant, the cardholder may dispute the charge
- Fraudulent Transactions: In cases of identity theft or credit card fraud, the legitimate cardholder may dispute charges made without their knowledge or consent
Splitit's Chargeback Policy
Splitit does not assume liability for amounts that are charged back. Merchants must register for chargeback webhooks in order to notify Splitit of any chargebacks and to facilitate an effective resolution.
When a dispute is filed, Splitit will immediately debit from your account, into a reserve, the outstanding plan balance. If all chargebacks are won and the shopper is successfully charged, you will be credited the full reserve amount. If a chargeback is lost, the shopper will keep the funds, and the refund amount will be collected and the reserve balance returned.
Splitit does not assume responsibility for collecting amounts owed to you in cases where you win a chargeback but Splitit is unable to capture the outstanding balance.
What to Do When You Receive a Chargeback Notice from Splitit
1. Review the Chargeback Notice
Understand the reason for the chargeback. Begin by either accepting the chargeback or disputing it. If you choose to dispute, proceed to the next step.
2. View the Chargeback in Your Splitit Hub
3. Dispute Your Chargebacks
Dispute the chargeback through your gateway or chargebacks provider.
Outcomes
See timelines.
Other
Cancel Initiated Due to "Lost" Chargeback
- If a plan is canceled, either due to a lost chargeback or a failed attempt to capture the outstanding amount after winning a chargeback, any outstanding amounts will be collected from your merchant account. You will see a line labeled "ChargebackRefund" in your Settlement Report with the outstanding plan amount
Chargeback Reserve: Holding and Releasing Funds
If a chargeback was initiated on a plan, Splitit will reserve the outstanding balance of that plan until the resolution of all chargebacks and the plan is completed
- Collecting Funds into Reserve
- When a chargeback is initiated on a plan, the outstanding balance will be held in a reserve
- Holding Period
- For the Outstanding Balance held in reserve, the reserve amount is held until all open chargebacks are resolved and the plan is either canceled or captured for the Outstanding Amount
- Releasing Reserve Funds
- A Reserve can be released if the outstanding balance on the plan is either captured or refunded and the plan has been "cleared"
Chargeback Fees
Chargeback fees vary by merchant agreement.
Chargeback Transactions in Your Merchant Reports
Refer to your Settlement Report (Detail). Net Settlement Amount is money debited or credited to your account. Transaction Type will be either Chargeback or ChargebackReversal.
Definitions
Chargeback Statuses
Open: Chargeback case has been opened for review
Pending: A dispute has been submitted and is awaiting a result
Closed: Chargeback case closed by the shopper or issuer
Lost: Chargeback case ruled in favor of the shopper
Won: Chargeback case ruled in the merchant's favor
Other: Other reasons such as unrecognized
Codes
Visa
| Code | Description |
|---|---|
| 10.3 | Fraudulent Transaction: No Cardholder Authorization |
| 10.4 | Fraudulent Transaction: No Cardholder Authorization |
| 11.3 | Requested/Required Authorization Not Obtained |
| 12.4 | Processing Error |
| 12.5 | Incorrect Amount/Processing Error |
| 13.1 | Merchandise/Services Not Received |
| 13.2 | Cancelled Recurring |
| 13.3 | Not As Described or Defective Merchandise/Services |
| 13.5 | Misrepresentation |
| 13.6 | Credit Not Processed |
| 13.7 | Cancelled Merchandise/Services |
| 1.7.7.3 | Transaction Reversal or Adjustment |
Mastercard
| Code | Description |
|---|---|
| 4808 | Requested/Required Authorization Not Obtained |
| 4812 | Account Number was Not on File |
| 4831 | Transaction Amount Differs |
| 4837 | Fraudulent Transaction: No Cardholder Authorization |
| 4841 | Cancelled Recurring Transaction |
| 4853 | Cardholder Dispute Defective/Not as Described |
| 4855 | Nonreceipt of Merchandise/Goods or Services Not Delivered |
FAQs
How long does the chargeback process take?
The chargeback process timeline varies depending on several factors, including the reason for the chargeback, the card network involved, and the efficiency of the parties involved in the resolution process. Typically, it can take up to 120 days.
How can I prevent chargebacks in the future?
Preventing chargebacks involves a combination of proactive measures, effective communication, and adherence to best practices including:
- Clear product descriptions
- Transparent billing descriptors
- Secure payment processing
- Excellent customer service
- Clear refund policy
Glossary
Capture Date: The date when a transaction is processed
Chargeback: A reversal of a transaction, initiated by the cardholder's bank, usually due to a dispute over the transaction
Chargebacks "Pending Decision": This indicates that the review process for the initiated chargeback is ongoing. The issuing bank, acquiring bank, and possibly the merchant are examining the details of the dispute to determine its validity and decide whether the chargeback will be upheld or rejected
Chargeback Reverse: A term used to describe the process in which a previously disputed transaction, initially refunded to the customer through a chargeback, is resolved in favor of the merchant. Consequently, the funds are returned to the merchant's account
Holding Period: The "Holding Period" refers to the duration during which a reserve amount, is held to mitigate the risk of a chargeback. During this time, the funds are not accessible to the merchant. This period typically lasts 120 days, ensuring that any potential chargeback claims can be processed and resolved before the reserved funds are released to the merchant
Reserve: A portion of funds held back from the merchant to cover potential chargebacks or disputes