Everything You Need to Know About Chargebacks | Cardinity (2024)

The chargeback process explained

1. Cardholder disputes the transaction through his/her card issuing bank.
2. The card issuing bank decides that the dispute is valid and sends the chargeback to the card network which forwards it to the merchant’s acquiring bank (Cardinity in this case).
3. The acquiring bank (Cardinity) informs the merchant about the chargeback, and the merchant decides how to respond. If the merchant wants to prove that the transaction was valid, he provides compelling evidence (e.g. proof of delivery or parcel tracking number).
4. The card issuing bank receives the evidence from the merchant through his acquiring bank and card networks.
   • If the card issuing bank decides that the provided evidence is enough to disprove the cardholder’s dispute, the merchant wins the chargeback, and the funds are returned to the merchant bank account.
   • If the card issuing bank decides that the merchant’s provided evidence is not sufficient to dispute the chargeback, the cardholder wins the chargeback and retains the money.

Chargeback limits
Every online business must not exceed chargeback limits set by Visa Europe and MasterCard International:

VISA - 0.9%
MasterCard - 1%

These limits are calculated based on the number of transactions made on a merchant’s online store using payment cards. If the merchant exceeds the set limits, his account can be suspended or terminated, unless the preventive measures are taken to reduce the volume of chargebacks.

How to prevent chargebacks:

• Provide as many details as you can about the goods and services you offer in your online shop.
• State the final price at the checkout page (including delivery fees).
• Indicate exact delivery times and delivery prices.
• Make it possible for a customer to exchange an item/product or to claim a refund.
• Make the return and refund policies available on your website and easy to reach.
• Provide contact information and ensure a quick response from your customer service.
• Be polite to your customers and responsive to their needs.
• Collect signatures in order to have evidence that products were delivered to the provided shipping address.
• Make a clear and recognizable description that appears on your customer’s bank account statement and make sure to inform your buyer about it.
• Respond to the payment processor’s requests for information as quickly as possible.
• Make sure to use fraud prevention tools (i.e.Verified by Visa/MasterCard SecureCode).