A chargeback is a situation in which a customer denies making a specific transaction via his credit-card or denies the charged amount.
The Israeli law called "חוק כרטיסי חיוב משנת 1986" states that in case of a chargeback done by the customer within 30 days from the day the manufacturing credit card company received the charge notification- the full chargeback amount will be transferred back to the customer.
When the reason for the chargeback is that the customer claims he didn't receive exchange for the charge as agreed, the business owner has to prove that he provided that product or service that were agreed upon, otherwise, the business won't be reimbursed for the chargeback sum.
A transaction done via the internet or a phone call is a transaction in which there is no physical use of the credit card and in many cases there is no clear document with the customer's details or his signature.
The Israeli law states that in case a customer claims he didn't make the transaction or didn't agree to the price he was charged for, the manufacturing credit card company has to refund the client for the amount that he demands back (as long as it is lower than the actual amount he was charged for).
Therefore the law provides a significant protection to the consumer but may also enable scams and situations in which legal transactions are being canceled while the client received the exchange that was agreed upon.
Business owners who are informed about the topic of chargebacks, and are prepared to deal with them, have an advantage of successfully obtaining proof for providing the product or service that was agreed upon to the client, and then receiving the reimbursement.
Dealing with chargebacks and transaction inquiries
In order to deal with a chargeback, the business owner has 2 main options:
1) Contacting the client in order to remind him of the deal they made in hope that the client will contact his manufacturing credit card company and inform them that he is canceling that chargeback/inquiry.
In this case, the information will be forwarded to us via the credit card company and we would refund the member's account wallet for the amount that was charged back from him due to the chargeback.
2) To reply us with an email message that includes one or more of the following documents:
An invoice, a signed voucher, an order document, a delivery approval (for example - of the Israeli post), a messaging conversation or any other document that supports conducting the transaction. The chances of successfully cancelling the chargeback are higher when there are more relevant documents that imply the transaction was done properly,
In addition to chargebacks, there is also a term called "transaction inquiry", which may be a preliminary stage for a chargeback.
In case we receive a notification regarding a an inquiry, we can conclude that the card holder contacted his credit card company since he didn't recognize the charge which appeared in his credit card charges list and asked to receive more details regarding this transaction. In this situation we recommend the business owner to contact the client in order to remind him of the deal they made in hope that the client will contact his manufacturing credit card company and inform them that he is canceling that inquiry since the transaction is valid.
A useful tool for preventing chargebacks:
The leading credit card companies in world have lead a technology based reform which provides a significantly useful tool for business owners to upgrade their security level and help them to deal with chargebacks and transaction inquiries. This system is called "safe shopping/transaction system".
This system validates the identity of the credit card holder:
The card holder is required to verify his identity while being in the process of the purchase, by typing a password which is being sent to him simultaneously. This password is being authenticated via the credit card companies servers. After the validation process, the client's internet transaction is being forwarded for proceedings with the normal and secure transaction process.
We offer such service of a "safe shopping/transaction system" is called 3DS. For more information, please click here -3ds
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