Chargebacks vs. Retrieval Requests: What’s the Difference?

We’ve written several blogs about chargebacks recently (check them out herehere, and here) – what they are, how to avoid them, and how to deal with them when they happen. Why have we devoted so much time to this topic? Because while hopefully chargebacks won’t happen all that often, when they do they can dramatically affect your business. We’re going to dive into the topic again today, and we’ll also introduce you to a related issue – retrieval requests. Let’s get started.

What is a Retrieval Request?

Let’s start with retrieval requests, sometimes known as a soft chargeback. This occurs when the bank or credit card company contacts your business to obtain more information about a certain transaction. A customer can start this process if they don’t recognize a transaction or if they need additional information regarding it. This can also happen if for some reason the information provided to the card issuer was incomplete or if the issuer believes the transaction may be fraudulent.

When a retrieval request is initiated, it is smart to reach out to the customer to explain what happened. It may be something as simple as your business name showing up as something strange on their credit card statement so they don’t recognize it. In most cases the confusion can be cleared up at that point and the customer will tell their card issuer they recognize the charge and allow it to be processed. If you cannot reach the customer, however, it may be prudent to issue a refund proactively. The ensuing chargeback will be very hard to defend against in this situation.

What is a Chargeback?

When a customer reaches out to their card issuer directly to demand a transaction reversal, this process is called a chargeback. The reasons for a chargeback vary, but some common ones include goods not received, items received not as advertised, or fraud. Chargebacks can be very frustrating for business owners because in many cases they could have been solved by better communication between the merchant and the customer. When a chargeback occurs, your bank will immediately place a hold on the funds involved. You will need to provide documentation to back up your version of the story and explain why the customer shouldn’t be able to recover the funds. It can take up to 90 days for the card issuer to review all of the documentation you provided and to make a decision. During this time, the funds will remain frozen and you will not be able to access them.

Protecting Yourself from Chargebacks

One of the most important things you can do to protect yourself from chargebacks is to maintain excellent records and open lines of communication with your customers. Become familiar with the chargeback procedures (they are fairly standard across the industry) and keep a clear log of all transactions and their supporting documentation. When and if a chargeback does occur, simply having all the paperwork already in order will be a huge help. Setting clear expectations for customers and communicating regularly will help you avoid chargebacks in the first place. Even if there is an unexpected shipping delay or other issue that will result in the customer not receiving their merchandise immediately, letting the customer know in writing will go a long way toward avoiding formal disputes.

Your other protection against chargebacks is a credit card processing partner you trust who will have your back in a payments dispute. At 360 Payments, we pride ourselves on educating our customers about chargebacks and other issues affecting their businesses and, we promise not to leave you hanging if one does occur. Give us a call at 408-295-8360 or drop us a line on our website. We’d be happy to show you why we’re different than “the other guys.”

PS – Is next day funding right for your business? Find out here.

PPS – Does your credit card processor have these four traits? If not, it’s time to reconsider!

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed