Merchant card processor: TSYS

If you choose to reject the dispute, the following 3 things can happen:

1. The issuer rules in your favor: the transaction is amount is again charged to the customer’s account and the funds are returned to your account.

2. The issuer rules in favor of the cardholder. The issuer’s case stands unless you choose to pursue arbitration.

3. You win, but the issuer files a second chargeback: the issuer has the right to file a second chargeback (called a per-arbitration chargeback by Visa) for the same transaction.

Acquirer:

A merchant acquirer is a bank or financial institution that processes credit and debit card payments for businesses. They’re tasked with acquiring payment on the merchant’s behalf.

Address Verification Response (AVS – Ecom only):

A fraud prevention service that matches the billing address provided on the transaction to the address that the card issuer has on file, ensuring that the person making purchase with the credit card is indeed the valid cardholder.

Allocation Dispute:

A process for Visa disputes that attempts to limit illegitimate chargebacks and shorten the time affected disputes take to resolve. Visa uses internal data and processes to automatically block disputes that don’t meet Visa’s requirements for validity. If a merchant wishes to dispute an Allocation, they would be proceeding into a pre-arbitration instead of a reversal, as is usual for other case types.

Amount Card Currency:

If the card used on the purchase was in a currency which differs from your merchant account currency, this amount shows the native amount which hit the card. A 10.00 CAD transaction would appear on a USD card as $7.63. Please note, when a charge is disputed, the amount on the card is reported, therefore you must always look for the card number in your records to find the transaction, if the amount doesn’t match. You should always provide details on any transaction with a specific card.

Arbitration:

Occurs when a cardholder has exhausted their chargeback rights but the issuer believes the acquirer’s second presentment is invalid or if the issuer did not receive documentation in a timely manner following the second presentment.

ARN :

This is the Acquirer Reference Number which is a unique value assigned to a batched transaction by the acquirer

Card Association:

also known as Card Brands. These entities, owned by financial institutions, license bank credit card programs. The most popular ones are Visa and Mastercard.

Cardholder:

The owner of the card involved in a transaction. This is not always the merchant’s client in certain situations such as fraud.

Case number:

The unique identification value assigned to each chargeback case.

CB Code:

Chargeback Error Code. This code is the response code assigned to each case depending on the reason of the chargeback. You can use this code to get more help on response guidelines in the Visa and Mastercard guides.

CB Type :

This is the Chargeback case type, CB1 – 1st presentment, CB2 – 2nd presentment, RR1 – Retrieval request

Chargeback:

Reversal of a transaction initiated by the cardholder. This is usually due to fraud, a processing error or customer dissatisfaction.

Chargeback Amount:

The amount in your merchant account currency. This can either be the full or the partial transaction amount.

Collaboration Dispute:

Similar to the other case types but this encourages the cardholder’s bank and the merchant to share information in an effort to resolve the dispute. If neither party agrees on a resolution, the case is escalated to an arbitration with the card brand (Visa or Mastercard)

CVV:

CVV is a 3- or 4-digit code on credit cards that acts as an anti-fraud security feature. It verifies that the customer in a card-not-present purchase is in possession of the credit card.

Dispute:

When it’s coming from a cardholder, a dispute occurs when a charge is reversed by the issuing bank, to a cardholder from a merchant. There are several parties involved, since a return transaction goes through the customer’s bank, the credit card association (such as Visa or MasterCard) and the merchant’s bank. Consumers can sometimes initiate a chargeback when they dispute a purchase made from a merchant. When it’s coming from a merchant, it is the same as Presentment.

First Chargeback (1st CB):

Reversal of a transaction initiated by the cardholder. This is usually due to fraud, a processing error or customer dissatisfaction.

Issuer:

The Issuer is known as the credit or debit card company. They’re tasked with issuing cards to consumers on behalf of the card associations.

Pre-Arbitration:

The case when a cardholder disputes a transaction for a second time with new evidence after the chargeback is reversed.

Processor:

Is a platform intermediary that facilitates communication between the issuing bank and the acquirer. The processor’s job is to verify and authorize payment.

Retrieval request:

The process through which a cardholder requests more information about a charge they don’t recognize on their account. It starts when a cardholder contacts their issuing bank to ask about a charge they don’t recognize on their account. In these cases, the issuing bank is usually asking for a receipt to be provided. If a merchant response is not timely or valid, the issuer might go ahead with opening a chargeback.

Reversal:

Following the chargeback or allocation, a reversal case is opened if the merchant decides to dispute the chargeback or allocation. This is when the issuing bank will decide on the outcome based on the documentation provided by the merchant. If the merchant wins the reversal case, the transaction funds will then be returned to them.

Second Chargeback (2nd CB):

(Usually occurs with Mastercard) When a transaction is contested or disputed a 2nd time by a cardholder.

What's a Chargeback

Whether you operate a retail or e-commerce business, there is a likelihood that you will eventually always encounter the risk of an unhappy client. When dealing with credit or debit transactions the client has the right to dispute a chargeback for a multitude of reasons such as fraud, failure to deliver goods or services or if they feel mislead by the business practices they were exposed to.

At Payfacto, we understand that being a merchant is difficult when trying to navigate the payment processing landscape and our priority is to help you through it. The following document outlines what happens when a cardholder disputes a transaction, the cardholders’ rights, your rights as a merchant, as well as describe the processes necessary to reconcile a dispute situation from start to finish.

The following document also uses information directly from Visa and Mastercard’s respective guides, so we feel it necessary to include the following disclaimers.

Visa Disclaimer

The information in this guide is current as of the date of printing. However, card acceptance and processing procedures are subject to change. This guide contains information based on the current Visa Core Rules and Visa Product and Service Rules. If there are any differences between the Visa Core Rules and Visa Product and Service Rules and this guide, the Visa Core Rules and Visa Product and Service Rules will prevail in every instance. Your merchant agreement and the Visa Core Rules and Visa Product and Service Rules take precedence over this guide or any updates to its information. To access a copy of the Visa Core Rules and Visa Product and Service Rules, visit www.visa.com and click on Operations and Procedures. All rules discussed in this guide may not apply to all countries. Local laws and rules may exist, and it is your responsibility to ensure your business complies with all applicable laws and regulations. The information, recommendations or “best practices” contained in this guide are provided “AS IS” and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. This guide does not provide legal advice, analysis or opinion. Your institution should consult its own legal counsel to ensure that any action taken based on the information in this guide is in full compliance with all applicable laws, regulations and other legal requirements. Visa is not responsible for your use of the information contained in this guide (including errors, omissions, inaccuracy or non-timeliness of any kind) or any assumptions or conclusions you might draw from its use. Visa makes no warranty, express or implied, and explicitly disclaims the warranties of merchantability and fitness for a particular purpose, any warranty of non-infringement of any third party’s intellectual property rights, any warranty that the information will meet your requirements, or any warranty that the information is updated and will be error free. For further information about the rules or practices covered in this guide, please contact your acquirer (Visa, 2018)

Mastercard Disclaimer

Mastercard makes no representations or warranties of any kind, express or implied, with respect to the contents of this document. Without limitation, Mastercard specifically disclaims all representations and warranties with respect to this document and any intellectual property rights subsisting therein or any part thereof, including but not limited to any and all implied warranties of title, non-infringement, or suitability for any purpose (whether or not Mastercard has been advised, has reason to know, or is otherwise in fact aware of any information) or achievement of any particular result. Without limitation, Mastercard specifically disclaims all representations and warranties that any practice or implementation of this document will not infringe any third party patents, copyrights, trade secrets or other rights.

A translation of any Mastercard manual, bulletin, release, or other Mastercard document into a language other than English is intended solely as a convenience to Mastercard customers. Mastercard provides any translated document to its customers “AS IS” and makes no representations or warranties of any kind with respect to the translated document, including, but not limited to, its accuracy or reliability. In no event shall Mastercard be liable for any damages resulting from reliance on any translated document. The English version of any Mastercard document will take precedence over any translated version in any legal proceeding.

What is a chargeback?

A chargeback is what happens when a cardholder challenges a processed transaction by reaching out to their issuing bank for reversal of the charge. The reason could be that the merchant’s client is disputing the validity of a transaction and is requesting the charge to be reversed, or the client is unsatisfied with the service and is requesting a refund.

How am I notified of a chargeback?

Typically, the first notification you will receive is an amount that is different from your fees or deposits being debited from your bank account. We always recommend looking further into any unknown amounts. At Payfacto, chargebacks notifications are sent by email, and chargebacks can be consulted on the merchant portal. By default, you are set up to receive this notification at the same email address you provided in your application as the customer service email.

Why did I receive a chargeback?

When dealing with credit or debit transactions, a cardholder has the right to dispute a chargeback for a multitude of reasons such as fraud, failure to deliver goods or services or if they feel mislead by the business practices they were exposed to. A “dispute” provides an issuer with a way to return a disputed transaction. When a cardholder disputes a transaction, the issuer may request a detailed explanation of the problem from the cardholder. Once the issuer receives this information, the first step is to determine whether a dispute situation exists.

Primary reasons Cardholders initiate chargebacks include:

• They are dissatisfied with merchandise or a service

• They never received the merchandise or service

• The return/exchange policies were not clearly visible

• They never authorized the charge (or do not remember authorizing the transaction)

• A recurring charge they had previously requested be terminated

• Currency conversion rates are unexpected

• Transaction being re-entered with an invalid/expired authorization code

When a dispute right applies, the issuer sends the transaction back to the acquirer and disputes the dollar amount of the disputed sale. The acquirer then researches the transaction. If the dispute is valid, the acquirer (in this case, our processor TSYS) deducts the amount of the dispute from the merchant account and informs the merchant.

What do I do once I receive a chargeback?

Do not issue a refund to the cardholder as the funds have already been collected from your account. Once the notification received, we recommend that you locate the disputed transaction and decide on how to proceed.

How do I dispute a chargeback?

The following steps can be followed to dispute a chargeback:

• Review the chargeback reason

• Gather all supporting documentation which proves that the chargeback is invalid

• Submit a compelling dispute package in English and upload documents to Merlink using your case number, which will start with the number 2

What should be included in a chargeback dispute?

When preparing a chargeback dispute package, it is important to ensure that everything is very clear and that you provide exactly what the chargeback response code or response letter requires as proof. In addition to providing proof, it is recommended to provide a rebuttal letter. You can think of a dispute like a court case. The issuing bank is the jury, and the rebuttal letter outlines the case you’re making to the jury, arguing why you’re innocent of the claim against you. In this rebuttal letter, you should identify yourself, list the facts and explain the situation. Make sure you keep it simple and make it specific to the reason code.

As for which specific documents to provide, we recommend consulting the Visa and Mastercard guides linked below.

How long do I have to reply to a chargeback?

Payfacto recommends that you respond to all chargebacks within 5 days of notification to ensure the dispute is executed on time.

Why does the chargeback amount differ from the initial transaction?

Chargeback amounts can differ for two reasons.

• If the card type that was used was foreign, exchange rates apply. The cardholder disputes the amount they were charged in their own currency, not the merchant’s.

• The cardholder can dispute a portion of the transaction, for example, the initial transaction was $150.00 but they charge back $90.00.

Do I pay a chargeback fee if I win a disputed chargeback?

Yes, you pay a chargeback fee regardless of the outcome of the dispute. Please consult your contract for more information.

Does Payfacto pay for or cover my chargebacks?

No, we do not. As soon as the processor, TSYS, receives the chargeback case, the chargeback amount is withdrawn from your bank account and returned to the cardholder.

How does Payfacto help in this process?

At Payfacto, we are responsible for forwarding the acquiring bank’s notification and providing you with information regarding your chargebacks. We can help with providing clarification on what proof to provide for the dispute. We also offer fraud prevention systems such as Address Verification Service (AVS) and 3D secure (3DS) which may come at an additional cost. AVS allows you to match the billing addresses provided by customers with those on-file at the issuing bank. Mismatched billing information suggests fraudulent activity. 3DS works like an online PIN code, users will be redirected to a separate page to enter a unique code before proceeding. We recommend speaking to your account manager if you are interested in these features.

How do I know whether I won or lost a dispute?

If a chargeback is closed in your favor, the amount will be refunded to the merchant’s account. You will receive a reversal notice if you win a chargeback dispute. If the amounts are not refunded after 30 to 45 days, then the chargeback was closed in the cardholder’s favor.

Why did I lose my chargeback dispute?

If you lose a chargeback dispute, it means the bank reviewed the documents from the dispute package submitted, and decided the evidence provided does not prove the chargeback to be invalid.

What is pre-arbitration and arbitration?

• A pre-arbitration case occurs when the cardholder and issuing bank uphold a chargeback that was disputed and won by a merchant. A pre-arbitration is a formal request from the issuer advising the acquirer that their cardholder’s claim is still valid and that they will request the card association to make an arbitration ruling on the dispute. At the pre-arbitration stage, there are two options available to you:

  • Option 1: Accept. This will initiate a second debit to your account for each of the transactions and will end the dispute.

  • Option 2: Decline. This will indicate that you wish to continue to contest the dispute. The issuing bank will have the right to file an arbitration case with VISA or MasterCard. If they rule in favor of the issuer/cardholder, you will be debited for each transaction amount and any associated fees (500$-$1500 and upwards per case). Please note that if you do not answer a pre-arbitration, the assumption will be that you are declining. Important note: If you decide to dispute the pre-arbitration/arbitration, you must provide additional supporting evidence. You cannot resubmit the information from the initial dispute. If you do not have additional evidence to submit, you should not proceed with the pre-arbitration as it will be refused, causing you to be liable not only for the chargeback values but the associated arbitration fees.

Why can’t I see my AMEX chargebacks?

If you are a part of the Amex OPT blue program, your chargeback service will be processed with Amex. We suggest that you reach out to their customer service team for further updates.

How do I consult a chargeback on the merchant portal?

1. Log into the merchant portal.

2. Select your merchant ID (MID); you can select multiple MIDs, but the resulting information will display chargebacks for all selected MIDs.

3. Click on the Date Range field and select the start and end dates you want to retrieve chargeback information for. NOTE: Because chargebacks only appear after a cardholder receives their statement, you should expand the date range to the last 6 months (or more) so it includes the date of the transaction causing chargeback indicated in the chargeback notices you received from PayFacto.

4. After you select the date range, click the Filter button.

5. Expand the Reports menu and click Detailed Activities; in the Activities Summary section, click on Chargebacks. The Daily Summary of chargebacks for the selected date range appears.

6. Review the information and take note of the date of the original transaction, the case number, and the amount of the original transaction.

How can I reduce chargebacks?

1. Here are a few best practice suggestions to help you avoid chargebacks and alleviate concerns:

   1. Customer service/ satisfaction - Communication is key. Overall, service and being easily accessible allows clients to reach out and resolve issues directly with you as opposed to contacting their bank to open a chargeback. If the customers know they can simply contact you for a resolution, the need to reach out to the bank is far less likely.

   2. Never accept an expired card – If a customer’s payment card is expired, reject the sale. Expired cards are invalid, and you risk an authorization error chargeback by accepting one.

2. Order confirmation + tracking number (If applicable) - Emailing confirmation is another way of validating the cardholder (CH) and linking them to the sale. It’s a form of protection against clients claiming, “Merchandise Not received”. If a chargeback is received, you will have a documented record of sale, proof of delivery, delivery address, policies, CH info etc. Implementing things like a digital signature, IP address verification etc, at the time of purchase or upon receival of goods will also reduce chargeback numbers.

3. No hidden fees - Chargebacks related to hidden fees are generally closed in the clients favor 98% of the time and diminishes the customer experience and the likeliness of them returning. It also increases chargebacks under reason code “Transaction not recognized, Not as described and Fraud unauthorized”.

4. Allowing refunds and clarify cancellation policies - If customers can get refunds through you directly, this reduces the chargeback numbers significantly. Providing cancellations policies safeguards merchants in cases where the client opens a chargeback for nonrefundable/ partially refundable items/service as it would all be written in the terms on the sales invoice, email confirmation etc.

5. Be aware of frequent occurrence of Friendly Fraud - Customers often have buyer’s remorse and change their mind or does not recognize the charge on their billing statement due to descriptor or difference in currency.

6. Clear Payment descriptor - Many customers simply do not recognize the name associated to the charges

7. Delivery proof + Time frame – It is important that you stick to the stipulated delivery times frames and/or provide a notice if there are delays (accepted by the client). You can offer refunds, rebate, or other form of compensation for delay.

8. 8. Opting for secure cc verification AVS/3DS services - Though these services have associated fees, they ensure the validity of transactions/authorizations, provide clients with extra security, increase perceived value of business, and lessen losses thus increasing profits and growth.

9. 9. Maintaining Records - These sale records will aid when responding to disputes as they serve as evidence and authentication of sales.

10. 10. Vetting Suppliers - You should always do their due diligent on suppliers, wholesalers etc.

11. 11. Monitoring staff behavior and employee conduct – You should provide employees with chargeback training and avoid stretching employees’ responsibilities and access.

12. In store sale authentication/verification - It is recommended to request proof of ID on larger sales and to always use the correct cardholder verification method—signature, PIN, Chip verification. When in doubt, for example after multiple declines using different cards, call the bank to authenticate cardholder information/sale.

13. Set Passwords and Rules – Make sure to provide passwords associated to each employee to be able to track activities and keep and eye on clerical errors such as double-billing or an incorrect amount charged.

If you have any further questions not answered by this document, please contact us at chargebacks@payfacto.com for further support.

Mastercard guide can be found here.

Mastercard Chargebacks Made Simple guide can be found here

Visa guide can be found .

Lutter efficacement contre la fraude nécessite une approche multifacette, incluant des technologies avancées, une surveillance vigilante et une collaboration proactive. L'implémentation continue de ces outils et stratégies renforce les défenses contre les activités frauduleuses, garantissant l'intégrité et la sécurité de votre entreprise et de vos transactions.

En plus de notre équipe dédiée d'experts en risque qui surveille minutieusement les comptes de votre entreprise, nous fournissons un ensemble d'outils supplémentaires de protection contre la fraude. Ces outils ne protègent pas seulement les revenus de votre entreprise, mais rehaussent également les niveaux de service, assurant une expérience sûre et sans heurt pour vous et vos clients. Certains outils proposés pour aider nos commerçants sont énumérés ci-dessous, mais ne sont pas limités à :

Surveillance des Activités/Transactions du Compte

• Configurer des alertes pour des schémas de transactions inhabituels.

• Surveiller et signaler les transactions à haut risque.

**Outils de prévention/détection de la fraude incluant la vérification d'adresse (AVS) + 3D Secure 2.2

Notifications de contrepassation

Directives de conformité

Règles de transaction

Rapports personnalisables

Comprendre la fraude

Les fraudeurs utilisent diverses tactiques pour cibler les entreprises à travers un éventail de canaux, incluant les plateformes en ligne, les transactions en magasin, le courrier et les interactions téléphoniques. Soyez assuré, nous sommes ici pour fournir le soutien et la protection nécessaires.

Rester diligent et comprendre les types de fraude auxquels votre entreprise est le plus susceptible d'être exposée est essentiel pour se prémunir contre les pertes associées à la fraude. Il est également important de pouvoir identifier les indicateurs potentiels et les signes pouvant mener à une fraude et de se tenir informé des tendances de l'industrie pour réduire et prévenir ces pertes.

Types de Fraude

1. Fraude par rétrofacturation : Les clients contestent des transactions légitimes.

2. Vol d'identité : Utilisation non autorisée d'informations personnelles.

3. Prise de contrôle de compte : Accès non autorisé aux comptes d'utilisateurs.

4. Fraude transactionnelle : Transactions fausses ou non autorisées.

Indicateurs courants de fraude

1. Modèles d'achat inhabituels.

2. Plusieurs commandes provenant de la même adresse IP.

3. Transactions de haute valeur provenant de nouveaux clients ou de clients occasionnels.

4. Incohérences entre les adresses de facturation et d'expédition.

5. Demande de saisir des ventes en tant que transactions manuelles.

6. Différences dans les informations fournies par le client, telles que des noms, des adresses ou des coordonnées de contact qui ne correspondent pas.

7. Augmentation des rétrofacturations

Stratégies de prévention

La mise en place d'une stratégie complète de prévention de la fraude implique une combinaison de technologies, de formation des employés et de mesures proactives pour devancer les menaces en évolution. Conservez des enregistrements, réévaluez et améliorez vos méthodes en fonction des tendances dans le monde toujours changeant de la fraude. Il existe de nombreuses mesures simples que vous pouvez implémenter pour protéger proactivement votre entreprise contre la fraude sous toutes ses formes, qui incluent :

Infrastructure de site Web sécurisée

1. Mettre à jour régulièrement et résoudre tout problème logiciel du site web. Utilisez le chiffrement SSL (Secure Sockets Layer) / TLS (Transport Layer Security) pour sécuriser la transmission des données. Ce chiffrement contribue à protéger les informations sensibles telles que les identifiants de connexion, les détails personnels et les transactions financières contre l'interception par des entités malveillantes.

2. Mettez régulièrement à jour et réparez tout problème logiciel de votre site web.

Vérification du client

Ceci est crucial pour protéger votre entreprise contre la fraude en empêchant les transactions non autorisées, en réduisant les risques de rétrofacturation, en améliorant la sécurité globale et en établissant la confiance avec les clients. Cela garantit également la conformité avec les réglementations, prévient le vol d'identité et contribue à l'intégrité générale du processus de transaction.

Système de Vérification d'Adresse (SVA)

1. Utilisez AVS pour vérifier l'exactitude des adresses de facturation.

2. Signaler les transactions présentant des incohérences d'adresse.

Vérification d'Identité

1. Demander une identification supplémentaire pour les transactions de grande valeur.

2. Vérifiez l'identité des clients à travers plusieurs canaux.

Formation des employés

Nous sommes là pour guider et donner les moyens d'éduquer et de rendre autonome vos employés avec les outils nécessaires. La formation des employés est un composant fondamental d'une stratégie globale de prévention de la fraude. Elle permet aux employés de reconnaître, de prévenir et de répondre aux activités frauduleuses, créant ainsi un environnement commercial et client plus résilient et sécurisé.

Éduquer les employés

1. Former les employés à identifier les indicateurs potentiels de fraude.

2. Établir des protocoles pour la gestion des transactions suspectes.

3. Former le personnel sur la protection des informations sensibles.

4. Former le personnel sur les réglementations de conformité spécifiques à votre secteur d'activité.

5. Former les employés à signaler les incidents rapidement.

Gestion des rétrofacturations

Nous fournissons un soutien et des outils pour contribuer à la capacité de nos marchands à naviguer efficacement dans la complexité de la résolution des problèmes de rétrofacturation. Cela est essentiel pour protéger les marchands contre la fraude. Cela aide à atténuer les pertes financières, à maintenir une réputation positive, à prévenir l'abus du système, et assure la conformité avec les normes de l'industrie.

Contactez-nous dès aujourd'hui à chargebacks@payfacto.com ou retrofacturations@payfacto.com pour en savoir plus et explorer comment nous pouvons vous aider à réduire vos chargebacks. Assurez-vous également de rester informé des dernières tendances du commerce et des paiements.

Conclusion

En mettant en œuvre une combinaison de mesures technologiques, de formation des employés et de communication efficace, les commerçants peuvent réduire de manière significative le risque d'être victimes de diverses formes de fraudes. Prioriser la sécurité protège non seulement l'entreprise, mais renforce également la confiance et la confiance parmi les clients. Protégez votre entreprise contre la fraude en combinant les capacités des outils de prévention de la fraude en libre-service, de meilleures pratiques, des règles de transaction et plus encore. En restant proactif, informé et en exploitant les bons outils, vous pouvez créer un système de défense robuste qui protège vos transactions et renforce la confiance avec vos clients.

Grâce à nos partenariats établis, nous avons accès à des outils supplémentaires qui peuvent être intégrés de manière transparente. De plus, nous proposons des rapports et des notifications personnalisables pour la gestion des rétrofacturations et de la fraude, assurant une approche sur mesure et complète à vos besoins spécifiques.

Améliorez les besoins de sécurité de votre entreprise grâce à nos outils avancés pour détecter et prévenir les transactions frauduleuses. Avec une expertise en conformité PCI, nous proposons un soutien approfondi pour aider à garantir que vos processus commerciaux répondent aux normes de l'industrie.

Contactez notre équipe de support dédiée à support@payfacto.com pour des ressources supplémentaires de prévention de la fraude et des mesures de sécurité renforcées.

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