Overview

This section describes chargebacks for Managed merchants (MOR).

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)

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.

When a dispute is filed, Splitit will immediately debit from your account into a reserve the corresponding chargeback amount, outstanding plan balance, and any at-risk funds from past charges. If all chargebacks are won and the shopper is successfully charged, you will be credited the full reserve amount. Otherwise, only the chargeback amount will be credited. If any chargeback is lost, the shopper will keep the funds, and the chargeback amount will not be credited to you.

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 Step 2.

2. Gather Your Evidence

Evidence can consist of transaction receipts or order confirmations, proof of delivery for physical goods, your merchant refund policy, other communication with your shopper, Splitit receipts (electronically signed print statements), Splitit's Refund Policy, Splitit's Terms of Use, etc. See the Evidence Guide.

3. Manage the Chargeback Case in Your Splitit Hub

Clearly present your evidence and provide a detailed response to the shopper's concern. It is crucial to be aware of the time constraints associated with disputing a chargeback, as outlined in the "Merchant Due Date" field in the Merchant Hub.

Splitit will review your case as soon as possible. In the interim, you can return to this same chargeback dialogue to see any updates on your case (they will appear in the Comments section). You can also remove or add new files if necessary, or download your files. When Splitit comments on your case, you will receive an email.

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 any past charges and 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 past charges "at risk" and the outstanding balance will be held in a reserve
• Holding Period
  • For past charges held in reserve, the reserve amount is held for 120 days from the capture date
  • Example: For a transaction captured on January 1st and the reserve collected on March 15th, the past charges will be held until May 1st (120 days)
  • 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 120-day holding period concludes
      • Example: On May 1st, the funds reserved from the January 1st capture will be released
    • A chargeback is initiated on another installment charge
      • Example: On May 1st, the 1st installment charge of a Splitit plan was taken into reserve. On May 20th, a chargeback was initiated on that 1st installment. We will collect (-) the corresponding chargeback amount and simultaneously release the reserve back to you (+)
• Chargebacks
  • If a chargeback occurs within the 120-day holding period, the following actions will be taken:
    • The chargeback amount is collected from the merchant
    • The reserved funds for the specific transaction are released back to the merchant

Chargeback Fees

Chargeback fees vary by merchant agreement.

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

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

At-Risk Funds: At-risk funds are amounts whose capture date is less than 120 days ago, making them vulnerable to chargebacks
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, equivalent to the captured transaction value, 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