Payrix Chargebacks

In this article:

• Introduction
• Cycle and Status
• Chargeback Cycle / Status combinations

Introduction

A chargeback is a process in which a credit card issuer or a bank reverses a transaction that has already been completed. The circle of chargeback refers to the steps involved in the chargeback process, which can include the following:

1. Dispute initiation: The cardholder disputes a transaction with their card issuer or bank.

2. Investigation: The card issuer or bank investigates the dispute to determine the validity of the claim.

3. Determination: The card issuer or bank determines if the dispute is valid and if the transaction should be reversed.

4. Notification: The card issuer or bank notifies the merchant of the dispute and the outcome of the investigation.

5. Representment: The merchant can provide evidence to support the validity of the transaction and request that the dispute is re-evaluated.

6. Final decision: The card issuer or bank makes a final decision on the dispute and reverses the transaction if necessary.

The circle of the chargeback is an ongoing process that can be repeated multiple times until a resolution is reached. The ultimate goal of the chargeback process is to provide a mechanism for resolving disputes between cardholders and merchants in a fair and efficient manner.

All chargebacks are disputes, but not all disputes reach the chargeback stage. A dispute is a claim filed by a cardholder or issuing bank, and it may be processed in one or multiple stages in order to receive a resolution.

Cycle and Status

A single dispute case can have multiple chargeback records with different cycles and statuses. These include:

Retrieval

This is usually a precursor to actual chargeback where the issuer is requesting documentation such as receipts, terms, and services, or proof of purchase. The chargeback cycle of Retrieval will not change and there is no financial impact on the merchant

First Chargeback and Re-presentment

The Chargeback status of first usually indicates an incoming chargeback that has not been responded to or has been pre-determined as Won or Lost. Once responded to, a first chargeback becomes a re-presentment. In most cases, a first chargeback will trigger a debit to the merchant and a re-presentment will trigger a credit to the merchant.

Pre-Arbitration Chargeback

The pre-arbitration chargeback is also referred to as the second chargeback. This is where the issuer rejects the re-presentment and decides to pursue the chargeback further. This typically results in a debit to the merchant, the same as the first chargeback. When a pre-arbitration chargeback is responded to by the merchant, it usually results in a credit to the merchant, the same as re-presentment.

Arbitration Chargeback

If a merchant responds to a pre-arbitration and the issuer does not accept the response, the case becomes an arbitration chargeback. The merchant can then either choose to accept liability or ask the card network to make a final decision at a cost.

Chargeback Cycle / Status combinations

• Final = Dispute is final. The case is closed and can no longer be responded to.

• Green = Chargeback results in the merchant receiving a credit.

• Orange = Chargeback results in the merchant being debited.

• Yellow = No financial impact to the merchant.

• Grey = Not valid.