Q & A on Chargeback Representments

When a merchant is faced with a disputed transaction — more formally known as a chargeback — they basically have two choices: accept the chargeback or fight it. Accepting the chargeback essentially means losing the value of the transaction, along with any chargeback fees that their payment partner may charge. The alternative is to fight the chargeback, which is known as a representment. Representment allows the merchant to make their case that a transaction was, in fact, valid. Here are some common questions and answers on chargeback representment:

How soon should a merchant respond to a chargeback?

If a merchant intends on disputing a chargeback, they should do so as soon as possible. Rules vary by network, but merchants have up to 45 days to file a representment from the day that a charge was disputed, so it is best to respond as soon as possible. Be ready to provide the acquirer with any documentation that can show a transaction was fulfilled and was valid.

Who should initiate the representment?

One of the functions of a merchant acquirer is to review disputed chargebacks and help merchants recover potential losses. It is the acquirer’s job to do the initial research on a transaction and determine if they need more information from the merchant or if they should represent the transaction. So the merchant acquirer is responsible for representing a transaction or requesting additional information from the merchant.

What happens after a chargeback representment?

There are two possible scenarios once a chargeback is re-presented to a cardholder’s bank:

  • The issuer accepts the representment and re-posts the transaction to the cardholder’s account. This is a favorable result for the merchant and they receive the funds for the transaction without incurring any chargeback fees.
  • The acquirer re-presents the transaction to the cardholder’s bank with supporting information that an order was fulfilled or that a transaction was valid, but the bank does not reverse the chargeback. Merchants do have the option of requesting arbitration with their merchant acquirer and providing additional information.

What are some best practices to receive a favorable representment decision?

The easiest way for merchants to win a disputed chargeback is to have best practices throughout the transaction process. The good news is that 41 percent of representments result in a win for merchants, but successfully disputing a chargeback requires merchants to have some good internal procedures. Maintaining good records, such as order forms, shipping information and tracking numbers, as well as making it easy for a customer to contact you are all ways that you can avoid chargebacks in the first place. Providing compelling evidence that refutes a cardholder’s claim is the best way to have a favorable representment outcome.

Chargebacks are a common occurrence, and merchants should know their rights and understand chargeback rules and fees. Of course, this can be difficult (Visa’s chargeback guidelines are nearly 100 pages, while MasterCard’s are more than 400 pages), but it is recommended that you review your acquirer’s documentation to at least have a basic understanding of your options when a chargeback does arise.