A chargeback is a transaction that a cardholder (the shopper) has disputed and that has been reversed (i.e. refunded to the cardholder) by the card holder’s bank (also called the issuing bank). The reason is typically one of the following:
- An unauthorized or fraudulent charge
- The cardholder did not recognize the charge
- A shopper who paid for but did not receive a product or service
- A shopper dissatisfied with products or services but was unable to reach a resolution with the merchant
- The cardholder has been charged an incorrect amount
BlueSnap operates with a sophisticated fraud screening application and employs an order review team to reduce fraudulent transactions. However, reducing chargebacks related to your products and services is primarily dependent on your cooperation and efforts. BlueSnap can offer suggestions for your website, pricing, refund policies, etc. that will help ensure the shopper is not confused when they make a purchase from your website. Once a chargeback has been filed by a shopper with the issuing bank, there are important steps you can follow to increase the likelihood that your chargeback dispute will be successful.
The dispute process should be considered a three step process: notification, merchant response and resolution.
- When the card issuer informs BlueSnap about a Chargeback, we will notify you via email. In the email, we’ll provide you a summary of why your customer requested the chargeback and exactly what documentation the card issuer requires to attempt to resolve the case in your favor.
- A hold will also be placed on your account for the disputed amount. Don't worry, this doesn't mean we’ve refunded your customer. These held funds will simply remain in your BlueSnap balance until the case is resolved and a decision has been made.
- If you believe the cardholder purchase is a valid transaction, read over the chargeback notification details and collect the supporting documentation that provides confirmation that the charge was valid as agreed upon prior to the sale. You’ll have 7 days to submit your response with all requested documentation and support by email to firstname.lastname@example.org. Once the documentation is received, the BlueSnap team of chargeback analysts will build your dispute case using the documentation provided, with the goal of getting the chargeback reversed in your favor.
- If BlueSnap in its judgment, does not receive enough evidence from you that will support a successful reversal of the chargeback then we will request additional documentation from you. To the extent sufficient information is not received, the BlueSnap cannot proceed with a dispute on your behalf. Once we receive sufficient information from you, BlueSnap will submit your case to the card issuer for review.
- You may not issue a refund through your BlueSnap Console or API. Please do not refund the shopper directly via cash, check, bank transfer, or another method, as you could potentially lose both the chargeback and refund amounts.
- If you decided to dispute the chargeback and have submitted the required documentation to BlueSnap within the required timeframe, the next steps in the process are in the hands of the card issuer. Even though we submit your case immediately, the issuer can take up to 75 days to send us their decision. As a reminder, the funds have not been refunded to your customer during this process, they are being held in your BlueSnap account.
- If the card issuer resolves the case in your favor, your customer now has up to 60 days to file a re-dispute. However, please note that this timeline can vary between different card issuers. If after the 60 days your customer has filed a re-dispute, we will release the deferred funds back to your account
- If the card issuer decides the case in your customer’s favor, the transaction will be cancelled and your customer will receive a refund from your account for the disputed amount. If at this time you want to pursue the case further, you will need to resolve it with your customer directly or seek legal advice and BlueSnap will no longer be involved with the dispute. There are significant costs involved to continue to pursue a dispute after the issuing bank has decided in the cardholders favor.
While most card transactions are not disputed by card holders, this is a risk you take when accepting card-based payments. You can reduce your risk and be prepared in the event that there is a dispute by taking the following precautions:
Make sure your return, refund, and cancellation policies on your website are clearly visible and understandable and are displayed at the point of sale on your checkout page. Add your terms and conditions to your products and services on your checkout page, which requires the shopper to proactively check a box to agree to your terms and conditions. This becomes useful evidence in the chargeback dispute process
You should proactively inform the shopper of the name that will show up on their credit card statement after the purchase is completed. Depending on the shopper's billing cycle, it could be weeks before they receive their credit card statement. Be sure to have a notice on your invoice similar to: “You will see a transaction from “BLS*Your Company Name” on your credit card statement.”
Initiate and maintain open communication channels with your shoppers through the merchant console. Clearly communicate expectations around pricing, sales tax, delivery, and shipping. In an effort to minimize chargebacks, the following dispute resolution steps should be considered:
- Communicate with the customer, offering help or explanation as to whether you are able to provide a refund.
- Partially or fully refund the order.
BlueSnap will take following actions with regard to chargebacks:
- If you fail to respond to the initial dispute within 7 days, an automatic refund will take place.
- If the customer does not reply to your resolution suggestion within 5 days, the dispute will be closed without a refund.
Keep in mind that you can always re-send an invoice to your customer from your BlueSnap Console.
- Make sure the soft descriptor set in your BlueSnap account is clear and reflects your product or company name. The soft descriptor is the string of characters that shoppers will see in their bank card statement next to the charge. It is crucial for shoppers to be able to recognize the charge and link it back to your product.
- Present a clear refund policy on your website and issue refunds accordingly. In order to prevent chargebacks, the merchant is encouraged to maintain a lenient, no questions asked, refund policy whenever possible.
- Make it easy and clear for buyers to find your customer support contact details and clearly list your hours of operation.
- Make sure your products are presented and described correctly to avoid buyer dissatisfaction.
- If the purchase is subscription-based, make sure the buyer is aware of future charges and terms and conditions by clearly stating them on your website, product pages and the BlueSnap checkout page. If there are recurring payments involved, there should be a checkbox that the shopper is required to check to acknowledge that there will be additional charges in the future.
- Trial subscriptions that convert into recurring payment plans need terms and conditions of the trial clearly stated and presented on the checkout page. A clickable checkbox agreement with terms and conditions also needs to be on your checkout page, requiring customer agreement before the purchase is finalized.
- Review your orders, refunds and chargebacks from the merchant console and look for fraud or chargebacks originating from specific countries. You can restrict buyers from certain countries from reaching your BlueSnap BuyNow page. Please contact us for additional information.
- All pre-arbitration and second chargebacks are accepted.
- Disputing a chargeback does not guarantee the issuing bank will reach an agreement in your favor.
- Chargeback dispute resolutions are not decided by BlueSnap and are solely determined by the rules and regulations set by the card payment brand, as implemented by issuing banks
- If a chargeback deadline has passed, you cannot dispute the chargeback for any reason.
- A lost chargeback does not mean you are out of options. You can attempt to reach a resolution with your customer directly or seek legal action.