Understanding Chargeback Disputes and Merchant Best Practices
Chargebacks can be a challenging aspect of payment processing for merchants. Below, we outline the key decision-makers in chargeback disputes, Valpay’s role in the process, and important considerations for merchants managing such disputes.
Who Makes the Decisions in Chargeback Disputes?
Final Decision in Chargebacks
The ultimate decision in a chargeback dispute lies with the cardholder’s issuing bank and, occasionally, the card network (e.g., Visa or Mastercard). While Valpay, as the payment processor, supports merchants throughout the dispute process by reviewing and submitting evidence, it does not have the authority to determine the outcome. This means that neither Valpay nor the acquiring bank can guarantee that a merchant’s rebuttal will succeed.
Moving to Pre-Arbitration or Arbitration
The issuing bank is also responsible for deciding whether a chargeback case progresses to pre-arbitration or arbitration. This escalation is contingent on the level of contestation and the evidence presented by both parties. Merchants can influence the progression by submitting well-supported documentation that validates their stance.
Valpay’s Role in Chargeback Management
Valpay acts as an intermediary in the chargeback process by:
Reviewing dispute evidence submitted by the merchant
Submitting this evidence to the appropriate parties (e.g., issuing banks or card networks)
Advising merchants on documentation guidelines and best practices
However, merchants should be aware that Valpay cannot control the final outcome of disputes or predict their resolution.
Guidelines for Merchants: Pre-Arbitration and Arbitration Considerations
When a dispute progresses to pre-arbitration or arbitration, merchants should carefully assess their course of action:
Evaluate the Strength of Evidence: Ensure that submitted documentation is comprehensive and directly supports your argument against the chargeback.
Weigh Costs vs. Potential Recovery: Arbitration often involves significant costs, including fees starting in the range of $500 or more. Merchants should consider these expenses relative to the disputed amount before proceeding.
Accept or Contest: Based on the strength of the evidence and the cost analysis, decide whether to contest the dispute through arbitration or accept the chargeback resolution.
Conclusion
Chargeback disputes require careful navigation, with key decisions lying in the hands of issuing banks and card networks. While Valpay assists merchants by facilitating evidence submission and providing guidance, merchants bear the responsibility of presenting strong documentation and making informed decisions based on the financial implications of progressing disputes. By understanding the roles of all parties involved and following best practices, merchants can approach chargeback disputes with clarity and confidence.