Understanding Chargebacks

What’s a chargeback?

Simply put, a chargeback is a billing dispute. A customer may claim that a company providing a service did not deliver what was promised, and attempt to get their money back. Or, a single transaction may have been processed more than once, resulting in a double charge. Such occurrences are only a few examples of events that may initiate a chargeback. When one of these events occurs, the chargeback process is initiated.

How do I handle chargebacks?

The chargeback process is closely regulated by credit card associations. The chargeback process typically carries a timeframe, which can be between 7 and 120 days, during which the chargeback can be filed. Chargebacks filed after 120 days will not be accepted, though occasionally there are exceptions. Some credit card companies also require a waiting period before a chargeback can be filed. In addition, before issuing a chargeback, the issuer must make every attempt to ensure that the right to issue a chargeback is only exercised when the cardholder has been billed and refuses to pay the transaction amount.

Credit card associations, such as Visa and MasterCard, have specific rules and regulations regarding chargebacks and the procedures that surround them. Each chargeback has what is known as a reason code, which is used by the bank to justify the chargeback. Each reason code has a specific set of criteria that must be adhered to in order to justify the reason code, and therefore legitimize the chargeback. If no reason code criteria can be satisfied, the chargeback cannot be processed.

How to prevent chargebacks?

Chargebacks are one of the most pressing challenges facing the world of e-commerce, so it would be wise to do whatever you can to minimize your chances of facing disputes.

The easiest way to prevent chargebacks is to ensure your transactions are not fraudulent. Using Address Verification Systems as well as Card Verification numbers are excellent tools for this. Also, please make sure you clearly define your product. When it comes to digital goods, you will greatly minimize your chargeback ratio if consumers are fully aware of what to expect from the product.

Another helpful tip when reducing chargebacks is to always make sure your refund and return policies are clearly outlined where the consumer can see them. This will help ensure that the customer is following proper procedures and taking the right amount of responsibility for the transaction.

Where can I check my refunds and chargebacks?

Information on refunds and chargebacks for your accounts and sub-accounts are available in the Transaction Reports in the CCBill Admin.

What if a consumer files a chargeback and then tries to enter my website?

CCBill maintains a negative database on chargebacks. Consumers who have filed for chargeback are blocked, and are very unlikely to gain access.

How does CCBill help you?

CCBill’s secure payment processing systems and award-winning VScrub fraud shield minimize your risk of chargebacks.

We use a proactive method of risk analysis in order to determine whether the consumer information is indeed valid. Instead of only using a negative database, which is blocking the consumer when a transaction is rejected, we do our best to prevent the chargeback from ever happening.

Note: CCBill's standard pricing includes chargeback fees (excluding EU Debit).