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Dealing with disputes and chargeback on SHOPLINE Payments

 

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Disputing a chargeback

A transaction dispute (chargeback) means a business deal is disputed by a credit card holder or issuer. Customers can file transaction disputes based on different reasons, such as not receiving products or services, defective products, unrecognizable businesses, fraudulent transactions, etc.

Since online transactions do not require the physical presence of credit cards to validate the card owner's details, the possibility of a transaction dispute is relatively high. 

Dispute category

If you accept credit cards on your SHOPLINE payments, you will likely need to deal with credit card transaction disputes. When a cardholder has an issue with a charge on their credit card, they can contact their bank to dispute the charge. Currently, the main dispute categories on a credit card are Retrieval and Chargeback.

Retrieval - Retrieval means the cardholder’s bank requests transaction clarification, often because the cardholder doesn’t recognize the transaction description. However, the cardholder’s bank will not immediately refund the disputed amount to the buyer. SHOPLINE payments team will reach out to you via email that there is a retrieval to be handled. You will need to provide evidence and submit it to the SHOPLINE payments team within two days, else the retrieval will be escalated to chargeback.

Chargeback - In most cases, the cardholder will raise a chargeback directly instead of a retrieval. If the cardholder’s bank raised a chargeback, the bank will immediately freeze the disputed amount immediately and a chargeback fee will be deducted. Your SHOPLINE payments balance will also be frozen accordingly to the disputed amount and respective chargeback fee. You will need to provide the evidence timely and submit it to the SHOPLINE payments team, or you will not receive the disputed amount as part of your sales.

 


 

How to handle disputes

Disputes will occur for different reasons when the cardholder contacts his card issuing bank. The dispute will usually follow the subsequent process:

The typical process for a retrieval:

  1. The cardholder disputes a charge with their bank.
  2. The credit card company sends a retrieval request. The credit card company does not freeze the disputed amount from you.
  3. The credit card company asks for SHOPLINE payments to prove the charge was valid.
  4. You gather evidence to determine whether the charge was valid and send it to SHOPLINE payments.
  5. SHOPLINE payments forward your retrieval response to the credit card company.
  6. The credit card company reviews the evidence and gives feedback to SHOPLINE payments, and you.

The typical process for a chargeback:

  1. The cardholder disputes a charge with their bank
  2. The credit card company sends a chargeback request and freezes the disputed amount and a chargeback fee from you
  3. The credit card company asks SHOPLINE payments to prove the charge was valid
  4. You gather evidence to determine whether the charge was valid and send it to SHOPLINE payments
  5. SHOPLINE payments forward your chargeback response to the credit card company
  6. The credit card company reviews the evidence and gives feedback to SHOPLINE payments, and you.

Action to resolve a chargeback or retrieval

You will receive our email notification regarding the dispute. Each dispute includes the dispute order information and the specific dispute reasons. You can resolve a chargeback or retrieval in the following ways:

  1. Contact the customer: You can reach out to the customer who made the order via phone or email to see if the issue can be resolved. If the customer agrees that the chargeback isn't necessary, they will have to contact their bank and ask them to drop the chargeback. You should also submit evidence that shows that the customer agreed to drop the chargeback.

  2. Provide additional evidence: After the cardholder's bank raised a retrieval or chargeback, you have up to 2 days and 7 days respectively to submit evidence that the charge was valid.

    The evidence you should submit depends on why the cardholder asked for a chargeback or retrieval. Keep your evidence relevant and consider including the necessary information, such as proof of customer authorization, and item delivery. You can also submit the terms of service and refund policy which is shown on your website.

    If your store is closed or password-protected, and you receive an email about a chargeback, then you need to follow the link in the email to log in and pay for a new plan to reopen the store. After you reopen your store, you can submit additional evidence for the chargeback. If you don't reopen your store, then only basic transaction information is submitted along with the chargeback.

  3. Issue a refund to resolve a retrieval: If you think that the reason behind a retrieval is justified, then you can issue the customer a full refund for the order to end the retrieval. Should you issue a partial refund, a full chargeback may still occur. If you issue a full refund, then the cardholder won’t be able to initiate a chargeback.

  4. Accept a chargeback: If you think that a chargeback is justified, then you can accept it by not submitting any evidence. The disputed amount will be returned to the customer, and the chargeback fee of this transaction will be deducted from your SHOPLINE payments account. 

 


 

Reasons for a chargeback or a retrieval

Each credit card company has defined hundreds of specific chargeback codes representing detailed reasons for disputes. SHOPLINE payments have summarized the standard codes into seven classifications, and these classification groupings can better assist you with the corresponding evidence submission.

Product was not received:

For the chargeback marked as Product not received, you should try to get in touch with the customer first to figure out the problem. If the problem is resolved, then you should inform your customer to contact their bank and to drop the chargeback. You should also submit evidence that the customer has agreed to drop the chargeback.

How to prevent it:

  1. For physical products, promptly ship them after payment is made.
  2. Estimate shipping and delivery dates as accurately as possible, and communicate clearly with your customer. If shipping delays arise unexpectedly, keep your customer informed.
  3. Save shipping labels, and for high-value products, consider requiring a signature upon receipt.
  4. Make it easy for your customers to get in contact with you when they have issues receiving their products.

If you can't resolve the issue with your customer, then you should submit the following evidence:

  1. The date and time that you fulfilled the order.
  2. The billing information that the customer used.
  3. The shipping address that the customer used.
  4. Shipping or delivery information of the order.
  5. If the product or service was digital, an activity log that shows that the customer has accessed the relevant product or service.
  6. Any other evidence that helps to win the dispute.


Product unacceptable:

For the chargeback marked as Product unacceptable , you should try to get in touch with the customer. If the problem is resolves , then you should inform the customer to contact their bank to drop the chargeback. You should also send evidence that the customer agreed to drop the charge.

How to prevent it:

  1. Ensure that the descriptions of products or services shown in advertisements, online, or transaction receipts are accurate, complete, and not misleading.
  2. If you need to ship physical products, please ensure that the product packaging and delivery methods can protect the goods from being damaged.
  3. Never refer cardholders to the manufacturer to resolve the issue directly. In fact, the business selling the product is liable and should proactively solve problems.

If you can't resolve the issue with your customer, then you should submit the following evidence:

  1. The date and time that you fulfilled the order
  2. The billing information that the customer used
  3. Shipping or delivery information for the order
  4. Descriptions or pictures of the products from your store that prove that they were as described
  5. Any other evidence that helps to win the dispute

 

Credit was not processed:

For the chargeback marked as Credit not processed, if the customer informed you that the purchased product was returned or that the transaction with you was canceled, but you have not yet refunded or credited the customer.

You should start by trying to get in touch with the customer. If you can resolve the problem with the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence that the customer agreed to drop the chargeback.

How to prevent it:

  1. Have a clear return or cancellation policy that’s easy to find or explicitly disclosed to the customer prior to purchase.
  2. Honor your written policies promptly when a customer requests and is entitled to a full or partial refund.

If you can't resolve the issue with your customer, then you should submit the following evidence:

  1. Your refund and return policies.
  2. Any emails or notifications you sent to the customer about the refund.
  3. An explanation of why the customer was not entitled to a refund.
  4. Any other evidence that helps to win the dispute.

 

Duplicate:

For the chargeback marked as Duplicate, If it is a reasonable deduction, then you should try to get in touch with your customer. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback. You should also send evidence that the customer agreed to drop the chargeback.

How to prevent it:

  1. If a customer’s credit card is accidentally charged more than once for a single payment, refund the duplicates immediately.
  2. Send detailed receipts explaining every payment and make it easy to distinguish the unique reason for each collection.

If you can't resolve the issue with your customer, then you should submit the following evidence:

  1.  An explanation of the reason for the two charges.
  2. Receipts that show that the two charges were for different products.
  3. Any evidence of communication with the customer that makes the customer aware of the detail of the two charges.
  4. Any other evidence that helps to win the dispute.

 

Unrecognized:

For the chargeback marked as Unrecognized, it means the customer doesn’t recognize the transaction information on their credit card statement. Sometimes the customer might have forgotten about the purchase, or the purchase might have been made by a spouse, friend, or family member.

You should start by trying to get in touch with the customer. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback. You should also send evidence that the customer agreed to drop the chargeback.

How to prevent it:

  1. Make sure your statement descriptor is easily recognizable to your customers and reflects the URL or business name they would associate with their purchase.
  2. Send receipts upon payment so your customers can recall what they paid for.

If you can't resolve the issue with your customer, then you should submit the following evidence:

  1. The date and time that you fulfilled the order.
  2. The billing information that the customer used.
  3. The IP address and country/region of the order.
  4. Shipping or delivery information for the order.
  5. Any other evidence that helps to win the dispute.

 

General:

For the chargeback marked as General, you should start by trying to contact the customer so you can figure out what the problem is. If you can solve the problem for the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence that the customer agreed to drop the charge.

If you can't resolve the issue with your customer, then you should submit the following evidence:

  1. Details about the products that were ordered.
  2. The date and time that the order was fulfilled.
  3. The customer's billing information.
  4. The customer's IP address and country/region.
  5. Emails or other communication you had with the customer.
  6. Shipping or delivery information for the order.
  7. Proof of prior refunds or replacement shipments.
  8. Any other evidence that helps to win the dispute.

 

Fraudulent:

For the chargeback marked as Fraudulent, it means the cardholder didn’t authorize the charge. To deal with a fraudulent charge, you can try to contact the customer. The customer might have forgotten about the purchase, or the purchase might have been made by a spouse, friend, or family member. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback. You should also send evidence that the customer agreed to drop the charge.

If you think that the customer is mistaken or not telling the truth, then you should submit the following evidence:

  1. The date and time that the order was fulfilled.
  2. The billing information that the customer used.
  3. Emails or other communication you had with the customer.
  4. The IP address and country/region of the order.
  5. Shipping or delivery information for the order.
  6. Any other evidence that helps to win the dispute.

 


 

Fraud prevention

Any transactions that are without the cardholder’s authorization is regarded to be fraudulent transactions. Fraudulent transactions may lead to chargebacks and lead to your loss. During the process of the transaction, you should try to look for any unusual issues and take action accordingly.

  • Different buyers but sending to the same address: If the user is using different account names and is located in different states with different billing addresses, the destination is the same place. Usually, this is a sign of fraudulent transactions. You can always use the billing information and communicate with customers to judge whether there is a trend of fraudulent transactions.
  • Orders with a large transaction amount: If you receive an order value that is much higher than usual, then the customer identity should be verified, and the actual reason for the occurrence of the big transaction should be understood. By communicating with the customers, any non-logical demands or unreasonable grounds should be vigilant.
  • Verify if the IP address matches the shipping address: The IP address and the recipient address may not be the same when the fraudster places the order. You can use Google Maps and the free tools to quickly look up a specific IP address, such as http://www.whatismyip.com/ip-tools/ip-address-lookup. You can also check the distance between the recipient address and the IP address district. If the two addresses are located in two different countries, then you have to be vigilant. Of course, if the purchase is for gifts or brought on behalf of others, then the two addresses are acceptable.
  • Purchase with high-value, easy to resell for cash: For electronic products, especially branded electronic products are easier to resell for cash. The merchants selling high-value products are more likely to be targeted with fraudulent transactions. Under such circumstances, phone communication on the respective orders and question buyers accordingly to see how they reply. For example, merchants can double-check the order’s mailing address, phone number, name, other information, etc.
  • Orders that requested “expedited” or “within 24 hours” deliveries: Whenever a fraudster does not mind any transportation costs and always requests for “expedited” or “within 24 hours”, merchants have then to be very vigilant.The physical products, in general, should be considering 24-48 hours delay dispatch. Such dispatching time allows cardholders to have the chance to reveal and report responsible fraud acts in their accounts. Under these circumstances, despite you will still receive a fraud report, at least you will not have any loss on your items.
  • Search for the email address: Searching for the email address on Google or another search engine can show if the email address was used in documented fraud attempts. You might also be able to find social media posts or other information that ties the customer to the email address.
  • You can contact the order's phone number: You can also use a service such as 411.com to make sure the phone number is located in the same area code as the billing address. Fraudulent customers often use invalid phone numbers. If someone answers the phone, then ask them some simple questions about their order and see how they respond. Do they know the addresses, phone number, emails, and names they used? Are they struggling to give you simple pieces of information? Etc.

 


 

How are transaction disputes (chargebacks) handled? 

In most cases, we suggest that businesses have a customer service center, or show their contact information on the storefront, where customers can contact to handle returns/refunds, this may greatly reduce chargeback on the refusal of products. When a customer raises a dispute, it is highly encouraged to take the initiative and contact the customer to find out the cause of the dispute. If the customer agrees to cancel the dispute, please ask the customer to cancel the dispute with the bank/card issuer, and it is advised to keep and submit the conversation record of the customer's decision to cancel the transaction dispute. Since transaction disputes might have different reasons, we will also follow the rules of credit card institutions (Visa, MasterCard) and require you to provide relevant information for defence, such as delivery records, service contracts, etc. Charges will be incurred when chargeback happens:

MY stores: MYR50.00 per transaction

SG stores: SGD16.00 per transaction

If a customer claims that the transaction is not authorised when raising a dispute, the credit card institution will take into consideration, whether the transaction has passed 3D verification or not when reviewing the attribution of responsibility. SHOPLINE Payments enables 3D verification by default, hence customers will receive a "one-time password" (OTP) through SMS to the mobile number they have registered with the bank to authenticate the transactions. This will not just ensure the transaction security of customers, but also further provide merchants with additional protection from chargebacks/frauds.

 


 

What are reserved funds for?

The reserved fund is used to prevent a negative balance in your SHOPLINE Payments account due to disputes or refunds. We will reserve a proportion (usually 10%*) from the successful transactions of your online store as a deposit, which will be used in case of refund/disputed transactions. 

If there is no need to use the reserved fund, we will release the fund after a certain period (usually 180 days*), and transfer it to your bank account as the usual payout. 

For MY/SG stores, this deposit will not be applied by default. The respective team shall review every business on a case-by-case basis. If they would like to reserve a portion of funds for your business, the respective team shall inform you in advance. 

SHOPLINE Payments reserves the rights to amend or adjust the proportion for deposit and holding period, according to the business type of the business.

 


 

Get in Touch

SHOPLINE has a specialized Merchant Success Team available to assist you with any questions or issues. Please feel free to contact us via the chatbox in the lower right corner of your SHOPLINE admin panel or on the SHOPLINE official website. We are always here to support you every step of the way and help your business thrive.

 


 

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