Navigating chargebacks

Learn how chargebacks work, why they happen, and how to handle them without hurting your business.

Navigating Chargebacks

Learn what chargebacks are, how they work, and why they matter for your business. Understand how they impact your bottom line and how to manage them effectively.

Chargeback Overview

A chargeback occurs when a credit card transaction is reversed, in full or in part, by the issuing bank after a cardholder disputes the charge. This process serves as a consumer protection measure, providing recourse for issues such as damaged or defective merchandise, items not received, or unauthorized transactions. Before initiating a chargeback, cardholders are typically encouraged to contact the merchant first. Banks often recommend this as the initial step in resolving a dispute. However, some customers may choose to bypass the merchant and proceed directly with filing a chargeback.

Common Chargeback Reasons

Chargebacks may occur for a variety of reasons, including:

  • 1. Fraud: Unauthorized or suspicious transactions may lead customers to dispute charges to protect against fraudulent activity.
  • 2. Duplicate Transactions: Customers may request a chargeback if they are billed multiple times for the same purchase due to an error.
  • 3. Missing Credits or Refunds: Customers may file a chargeback if they do not receive an expected refund for a return or cancellation.
  • 4. Shipping Issues: Non-delivery or excessive shipping delays can lead to chargebacks as customers seek resolution.
  • 5. Damaged Products: Chargebacks may be filed when items arrive damaged, defective, or significantly different from what was described.
  • 6. Subscription Issues: Chargebacks can occur when customers continue to be billed after canceling a subscription.
  • 7. Billing Discrepancies or Other Concerns: Errors, dissatisfaction with a purchase, or other concerns may lead to a chargeback.
  • 8. Unrecognized Transactions: Unrecognized charges, often due to fraud or processing errors, frequently result in chargebacks to protect account security.

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    The Chargeback Life Cycle

    Chargeback life cycle

    2nd Dispute and Arbitration Cycle

    Arbitration cycle

    Strategies to Prevent Chargebacks

  • - Clear Communication: Maintain transparent communication with customers by providing accurate information and timely updates.
  • - Fraud Prevention: Use secure, PCI-compliant payment methods to reduce the risk of fraudulent transactions.
  • - Flexible Returns and Refunds: Establish straightforward, customer-friendly policies to simplify dispute resolution.
  • - Accurate Descriptions: Provide clear product descriptions with high-quality images and detailed specifications.
  • - Proactive Dispute Handling: Address customer concerns promptly and work toward mutually satisfactory resolutions to help prevent chargebacks.

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    Tracking Chargeback Progress

    ⚠️ Action Required:  Awaiting merchant response.

    ☑️ Accepted: Merchant has accepted the chargeback.

    📩 Response Submitted: Merchant's evidence submitted.‍

    🔍 Review in Progress: Awaiting final decision.

    🛑 Expired: No response received; funds not credited back.

    ❌ Lost: Chargeback closed, merchant not refunded.

    ✅ Won: Decision made in favor of the merchant; refund issued.

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    Chargeback Alert

    If you receive a chargeback, Redde is here to help.

    notification

    Notification

    Redde will inform you about the chargeback through our dedicated Chargeback platform, via email, or directly through a call from our team.

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    financial adjustments

    Financial Adjustments

    Your account will be debited for the disputed amount plus a chargeback fee. If the dispute resolves in your favor, these funds will be reimbursed.

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    guidance and support

    Guidance and Support

    We provide detailed explanations of the chargeback reason and guide you through the necessary steps to contest the dispute via our Chargeback platform.

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    dispute resolution

    Assistance in Dispute Resolution

    Redde offers support on how to effectively challenge the dispute, enhancing your chances of a favorable outcome.

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    While the final decision on the dispute is made by external parties, Redde is fully committed to supporting you throughout the process and providing as much guidance as possible.

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    Chargeback Lifecycle

    Retrieval

    Retrieval

    A document request is often made by the cardholder's bank to gather details about the transaction, such as receipts or descriptions of the services provided.

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    Pre-Notification

    Pre-Notification

    An early alert of a potential chargeback, giving the merchant extra time to resolve the issue and potentially prevent the dispute.

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    Chargeback

    Chargeback

    The dispute has progressed to a chargeback, and the cardholder's bank has issued a refund. Merchants have a limited time to respond.

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    Arbitration

    Arbitration

    Pre-Arbitration: A stage where, after a chargeback response fails to resolve the dispute, merchants can opt for arbitration, though it comes with associated fees. Arbitration: If initial resolutions are contested, the dispute escalates to a neutral third party, such as Visa or Mastercard, for a final decision.

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    The Redde Advantage

    At Redde, we understand the chargeback process and are committed to providing comprehensive support and solutions. Our expertise ensures you’re equipped to manage and dispute chargebacks effectively while learning best practices to reduce their frequency. By partnering with us, you gain a dedicated team focused on helping you navigate disputes, protect your revenue, and strengthen your business.
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