With advent of technology, growing usage of ecommerce by merchants to sell goods on global level. It is been observed that the people have started taking the privilege of paying through cards, as the service provided by the ecommerce websites. But, very few aspiring merchants know that a customer can ask for refund within three month of transaction for any reason like not recogainizing the transaction, not satisfied with the product or service, merchandise not delivered or with the intention of frauds.
This dispute of transaction and asking the money back for any given reason is called Chargeback. For customer chargeback, if a customer feels that the merchant is cheating for any reason, customer directly contacts to the banks for the refund of the transaction. Though, in many cases, the bank places a conference call between merchant, customer and the cardholder’s bank to see if merchant and customer can resolve the problem. If the customer is not satisfied with the merchant’s conversation, they ask finally ask for the money back. For this reason, the cardholder’s bank issues the credit for the cardholder’s account. Asks merchant account bank to issue a debit for the merchant account the cardholder’s bank also issues the requirement of document for the merchant, if the merchant likes to fight the chargeback and can prove that customer’s reason for refund is not valid.
Merchant have limited time to respond to fight chargeback and to provide legal documented proofs to the cardholder’s bank. If the proofs examined as valid documents, the credited amount to the customers is take back again and is given to the merchant again. As the decision about chargeback is ruled in favor of merchant, the customer/cardholder has the right to file the second chargeback on the transaction; this is called the “Pre-Arbitration” in VISA’s chargeback process and “Second Chargeback” in MasterCard chargeback process. For this, the merchant have to repeat the same process for fight again for the transaction to be proved as valid.
To fight chargeback, merchant’s need to be active for Representment every time the bank issues the request of documents. Delay in representment many times results in loss of charges of the product from the merchant account. This option of repetitive filing of chargeback is the drawback of this internet transaction method. Many people try to take advantage of this clause of repetitive dispute of transaction. As fraudster develop new ways of cheating the merchant, and this repetitation of filing chargeback is one of them.