What is a dispute (chargeback)

This document will give you an overview on what a chargeback is and how you can potentially respond to it as a Safepay merchant.

  1. What is a dispute
  2. Why would a customer file a chargeback
  3. How are chargebacks filed
  4. As a Safepay partner, how do I find my chargebacks?
  5. How do I respond to chargebacks?
  6. What happens when you lose a dispute/chargeback

What is a dispute?

A chargeback is a reversal of a payment made to a merchant, back to the customer's bank account. The reversal is done by the customer’s bank, at the request of the customer and it is used as a form of consumer protection to secure the customer's interest in wrongful transactions. This means a customer has a right to file a chargeback for a transaction if there is a valid reason to do so. 

Chargebacks are different from refunds. In the case of a refund, the customer reaches out to the business to ask for a refund, which may or may not be honored depending on the business' policy. However, for a chargeback, the customer contacts their bank directly to forcibly reverse the transaction.

Why would a customer file a chargeback?

Customers file chargebacks when they do not receive a product or service they paid for. Also, it could be a case of receiving the product in poor condition, or getting something entirely different, this means they will be unable to use it for what it was intended. Another reason why a customer might file a chargeback is when they did not authorize the transaction in question, that is, being a victim of fraud. There is also the possibility that a chargeback is filed in error, perhaps the customer does not recall that they made a purchase.

How are chargebacks filed?

To file a chargeback, the customer simply has to reach out to their bank and highlight the transaction(s) in question and their bank will begin the process. When the customer’s bank receives the chargeback claim, they escalate this to the merchant or the merchant's bank, who then informs the merchant. The merchant has the opportunity to respond to the chargeback either by accepting it, or declining it with sufficient evidence that proves value was given to the customer for that transaction. 

As a Safepay Partner, how do I find my chargebacks?

The customer’s bank sends a chargeback claim to Safepay through our bank, we then immediately dispatch this information to your business email. The email notification informing you that a chargeback has been logged will be sent to the same email you created your Safepay account with; the email will capture the transaction reference, date and time of the transaction, as well a link that takes you directly to the chargeback on your dashboard.  The email you receive will look like this:

The email will contain all the details relevant to the chargeback including customer details, transaction details and a link to the specific transaction on your Safepay dashboard. Clicking the link will take you to a page that looks like this:

Important to Note:

All chargeback notifications are sent to the email you registered with. It is very important that this email is one that is regularly reviewed by someone in your organization that can respond to chargebacks.  This is so you do not lose money to wrongful chargeback claims.

How do I respond to chargebacks?

Merchant can respond to a chargeback claim in two ways:

  1. Accepting a chargeback:  This means you successfully received the customer’s payment but did not provide the service or product the customer paid for. This could be for several different reasons due to technical issues or human error.  When you accept a chargeback, you allow for the funds to be deducted from your payouts and reversed to the customer’s bank account.

  2. Providing Evidence/Declining a chargeback: This means you successfully received the customer’s payment and have provided a service or delivered the product to the customer.  To justify this, you will need to upload a form of evidence to support your claim, such as a receipt or invoice, anything that proves value was provided.  If the evidence is not sufficient, we will automatically accept the chargeback.

Safepay merchant dashboard allows you to deal with your chargeback claims in an efficient manner. Please click here to read on how Safepay helps you fight chargeback claims.

What happens when you lose a dispute/chargeback

Merchant can lose a dispute due to one of the following reasons:

  1. Evidence provided by merchant was not compelling enough for the dispute claimant/moderator institution
  2. Merchant failed to provide appropriate evidence in due time 

In either of these cases, the merchant ends up losing the dispute. This means that the amount which was disputed will be fully deducted from merchant's next settlement cycle. If the dispute has gone into the arbitration phase and the merchant loses it, a fee of $500 has to be paid by merchant to the arbitration scheme. Read more about it here

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