Chargebacks can be confusing, but understanding the different types can help you protect your business and your bottom line. Here's a breakdown of what you might encounter:
1. Retrieval Request (Discover) or Inquiry (American Express):
- What it is: This is essentially a "heads-up" or a request for more information about a transaction from your customer's bank. It's their way of trying to resolve a customer's query before it becomes a full-blown dispute.
- Impact on your funds: No money has been debited from your account at this stage.
- Your action is required: Don't ignore these! For Discover Retrieval Requests and American Express Inquiries, you absolutely must respond. This is your best chance to resolve the issue early.
- What happens if you don't respond: Failure to provide the requested information within the ten day time period will lead to the dispute escalating into a formal chargeback. At that point, the transaction amount will be debited from your account, and you'll lose your opportunity to reverse it.
2. Chargeback
- What it is: This is a formal dispute initiated by a customer against a transaction. They are officially challenging the charge.
- Impact on your funds: When a chargeback occurs, the transaction amount will be debited from your merchant account immediately.
- Your opportunity to fight: Even though funds are debited, you still have a chance to respond and present your evidence (called "compelling evidence") to dispute the chargeback and potentially recover your funds.
3. Pre-Arbitration
- What it is: Consider this your final warning before a dispute moves to the costly and formal arbitration process. It means the customer's bank is still pursuing the dispute, and you have one last opportunity to resolve it without going to arbitration.
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Your choices:
- Accept the chargeback: If you choose this, or fail to respond within the ten day time period, the chargeback amount will be permanently debited from your account.
- Pursue Arbitration: This means you believe you have strong evidence and want to fight the dispute further. Be aware that arbitration can involve significant fees, regardless of the outcome.
- Impact on your funds: If you accept the chargeback or don't respond, the chargeback amount will be debited from your account as a final transaction.
If you've received any type of chargeback notification and have questions, don't hesitate to call the PayJunction Risk Department at 800-601-0230 x5. We can help guide you through the process.
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