Chargebacks and retrievals

  • Understand what they mean for your business and how to respond to them
  • Tips and advice on protecting your business and preventing future chargebacks
  • Specific guidance for online, mail order and phone payments – and hotel, restaurant and POS based business transactions

Overview

Understand the risks and minimise the impact

Chargebacks and retrievals can cost your business money. They happen for a number of reasons, not all of them related to fraud. But it's important to know what they are, how to respond to them and how to protect your business from potential losses as a result of them.

What's a retrieval?

A retrieval request, also known as a Request for Information (RFI) is raised by a credit card issuer when a cardholder disputes a transaction on their statement. This usually occurs when they don't recognise the transaction and need more information to work out whether they made it, or if it was fraudulent or unauthorised.

Under the Card Scheme regulations, you must provide detailed information on a transaction if you receive a retrieval request. If you don't respond in time, it may become a chargeback.

How long do I have to reply to a retrieval request?

You should ensure that we receive your response and any supporting proof relating to the transaction within 14 days from the date of the retrieval request.

What's a chargeback?

A chargeback happens when a transaction you've initially received payment for is subsequently rejected by the cardholder or issuer and debited back from you.

Common reasons why chargebacks occur

  • You, or your customer, have made an error at the point of sale, such as using an expired card.
  • A cardholder or card issuing business disputes the transaction. For example, if the card or cardholder weren't present at the point of sale.
  • The transaction was made fraudulently by mail, phone or online.
  • You didn't respond to a request for a copy of a transaction (retrieval) in time.
  • It was a duplicate transaction and the cardholder was charged more than once.
  • The transaction was not authorised.
  • The goods or services ordered have not been received.

Responding to chargeback requests

You're given 14 days from the date of the chargeback request to respond to it and provide relevant proof and information, as set and regulated by the Card Scheme.
We'll do everything possible to defend chargeback requests that we receive, on your behalf. However, specific time limits and rules applied to each chargeback in line with the Card Scheme, greatly influence the actions we are able to take.
If the Card Scheme rules were breached, the transaction amount may be charged back to your business and debited from your account. However, if the transaction wasn't in breach, we may be able to defend the chargeback.

How to prevent them

Stop retrievals turning into chargebacks

A large number of chargebacks are the result of retrieval requests that aren't actioned correctly. Of course the most important way to prevent chargebacks is to follow the correct processing procedures and ensure your staff do too. The second most important factor is how you respond to retrievals.

How to respond to retrieval requests correctly

  • Make sure that the copy of signed authority (PDQ slip or imprinted voucher) is clear and legible. If any of the information on the slip or voucher is unclear, the card issuer has the right to escalate it to a chargeback.
  • Never send the original voucher to us as we may not be able to return it to you.
  • The expiry date on the card should be supplied.
  • Always reply in writing – written confirmation will be required for any decision you make regarding the retrieval request.
  • Provide a contact name and a phone number so we can get in touch if there are any problems or we need more information.
  • We must receive your reply and supporting information by the date specified in the request letter or fax so we're able to respond to the card issuer within the time set by the Card Scheme regulations. If we're late, they can issue a chargeback even if the correct information was received.
  • Always quote our reference number or case ID on all correspondence for easier processing.
  • Details that need to be clearly readable are: cardholder name; account number; expiry date; merchant's name, number and location; and signature (if one was taken).
  • Always retain copies of transactions for your own reference, even if you are handing the original over to a third party – such as the police.

Help to respond promptly

Since time is of essence in preventing chargebacks, we offer a free service called Faxlink.
It helps you receive and respond to chargeback and retrieval requests for information, quickly and directly by fax. Since all you need is access to a fax machine, setting up Faxlink for your business is easy – just give us a call.
Using Faxlink benefits you by:
  • Delivering advice and information to you quickly, and enabling fast responses from you
  • Minimising the risk of lost correspondence
  • Providing confirmation of receipt
  • Allowing you to send faxes sent at a time that's convenient to you e.g. outside of peak working hours
  • Guaranteeing the arrival of your documents, unlike the postal service which may be subject to disputes or delays.

Be prepared by storing transactions carefully

If you can't supply a copy of a transaction voucher when requested to, your business will almost certainly receive a chargeback and funds will be debited from your account. So we recommend that you file all transactions, in the following manner:
  • File them by either card number, or the date they were made - not by cardholder name
  • Always keep original merchant transaction copies for a minimum of six months as disputes can arise up to six months after a transaction. Beyond this, copies should be kept for a further year, so the total storage time for transactions is 18 months.

Received a chargeback?

How to deal with different types of chargebacks

When you receive a letter notifying you about a chargeback, there'll be a heading and description of what type it is. Using this and the advice below will help you understand the reasons behind it, what you should do and how to prevent future chargebacks of this nature.


Alteration of amount

Why it happens
The card issuing business believe the transaction receipt amount was altered without the cardholder's permission.

Preventing it in future
Ensure that all necessary charges are detailed in the transaction at the point of sale, in the presence of the cardholder. If further charges need to be added, you must create a new transaction and seek the cardholder's permission to process it.


No authorisation

Why it happens
The card issuing business believe the transaction amount is over your business's floor limit and that authorisation wasn't obtained.

What to do

We will need proof that authorisation was obtained, and if you're unable to supply this, the amount may be debited back. If we have no alternative but to debit you for the amount of the transaction, you may contact the customer direct to see if you can recover the payment by another method.

Preventing it in future
Obtain authorisation on all transactions over your agreed floor limit, even if a customer is well known to you – because the chargeback may be initiated by the issuer not the cardholder. If you need to have your floor limit reviewed, please contact us.


Cancelled guaranteed reservation

Why it happens
The cardholder has contacted their card issuing business to say that the booking or reservation was cancelled but their account has still been debited.

What to do

We usually provide you with a copy of the cardholder's letter, detailing when the booking or reservation was cancelled and a cancellation number if one was given. You will need to respond promptly with your comments and copies of any paperwork relating to the chargeback.

Preventing it in future
If you don't already have a policy of issuing and recording cancellation numbers, you may want to look into implementing one. This will enable you to check cancellation numbers against your records.


Cancelled recurring transaction

Why it happens
A transaction has been processed to an account that's no longer valid, or the cardholder has cancelled their continuous authority agreement with you and you haven't acted on their instructions. What to do
In this instance, we're required to automatically debit the amount from you. You will then need to contact the customer directly for payment.

Preventing it in future

  • Seek authorisation for all transactions, as this will highlight any cardholders who've changed their account numbers.
  • Always ensure you note the expiry date, and if it's not available, only enter the dummy date 2222 on direct transmission systems or 1234 on terminals (both Barclaycard and customer owned).
  • You should also send a reminder to each customer 4–6 weeks before the transaction is due to take place to confirm the details are correct and the product is still wanted.

Card recovery bulletin

Why it happens
The card issuer believes that you've not checked the card recovery bulletin to see if the card number was listed.

Preventing it in future
Ensure you check all cards you take payments on, against the bulletin.


Card not present

Why it happens
The card issuer's been advised by the cardholder that they didn't make or authorise the transaction.

What to do
We will need copies of all documentation you have, including invoices and proof of delivery to prove if the transaction was undertaken by the cardholder. /p>

Preventing it in future
Ensure you authorise all transactions as we can't guarantee payment on any mail, phone or online orders where the cardholder is not present at the time of the transaction.


Declined authorisation

Why it happens
A request for authorisation was declined but your business continued to process the transaction even though it had been declined.

Preventing it in future
If authorisation is declined, never split the amount and process separate smaller transactions to get it to go through – this is against your Merchant Member Agreement and could make you liable for the chargeback. Always obtain an alternative means of payment from the customer instead.


Defective merchandise

Why it happens
The cardholder has contacted their card issuer claiming that merchandise delivered to them was damaged or defective.

Preventing it in future
Ensure that your merchandise is sent in packaging that's able to withstand the journey and provide contact information for customers to request a replacement, should damage occur.


Domestic transaction receipt violation

Why it happens
The card issuing business has initiated a chargeback because a domestic transaction receipt was not deposited in the country where the transaction took place, and was processed with an incorrect transaction country code.

Preventing it in future
Ensure that all transaction receipts are deposited in the country where the transaction occurred.


Duplication

Why it happens
The card issuer believes that a single transaction amount was processed more than once, and the cardholder may have the same amount appearing multiple times on their statement.

Preventing it in future
When you submit transactions for processing, ensure that you're not duplicating transactions that may have already been sent.


Expired card

Why it happens
The card issuer believes the card had expired when the transaction took place and authorisation wasn't obtained by your business.

What to do
We will require proof that the card had not expired when the transaction was processed, or proof that appropriate authorisation was obtained. If you're unable to provide this, we may have to debit the transaction amount from your account. If this happens, we suggest that you attempt to contact your customer directly to try and recover the payment.

Preventing it in future

  • Manually check each card expiry date at the time of the transaction, and if it doesn't have a valid date, ask for an alternative payment.
  • Seek authorisation for all transactions and where possible, contact customers to confirm their card details.

Ineligible transaction

Why it happens
The card issuer believes that a magnetic-stripe transaction was completed, but the service code indicated that the card was invalid and no authorisation was obtained.

Preventing it in future
Ensure you obtain authorisation for all transactions and that all cards used for payment through your business carry the Visa, MasterCard, JCB or Maestro symbol.


Invalid/incorrect card number

Why it happens
The card issuing business has rejected the transaction because the card number entered and processed is incorrect. It could be a simple inputting error if it was manually keyed into the PDQ terminal. This could also happen if the card used was not a Visa, MasterCard, JCB or Maestro card.

What to do
Authorisation only checks that the card number is a valid combination of digits, it does not guarantee payment. We will contact you and ask for a copy of the transaction to enable us to investigate further, or we may debit you with the transaction amount if we're certain the card number is incorrect. If there's no alternative but to debit the transaction amount from you, you could try contacting the customer directly to try and recover the payment.

Preventing it in future

  • Always check that cards presented for payment have the Visa, MasterCard, JCB or Maestro symbol.
  • If the card number is keyed into the electronic terminal take extra care when inputting the digits and double check before confirming the sale.
  • Also check that the card number on the transaction slip is the same as the one embossed on the card.
  • Ensure you authorise all transactions.
  • If taking payment over the phone, repeat the details back to the customer to confirm they're correct before proceeding.

Late presentation

Why it happens
The card issuer believes that the transaction was not processed within the agreed time frames. What to do
We will require proof that the manual voucher was banked within three days or that your electronic terminal was polled within the timeframes below. If you can't provide this, the amount may be charged back to you.

Preventing it in future
Always advise us immediately of any faults on your terminals and that your staff understand the importance of this too. It's your responsibility to inform of us of faults as failure to do so can result in chargebacks that we are unable to defend on your behalf. Please make sure that you submit transactions within the designated time limits, which are:

  • Maestro – before 0730 on 1st business day following transaction date
  • Visa – three business days from transaction date
  • MasterCard – three business days from transaction date
  • Electron – two business days from transaction date

Missing refund

Why it happens
The cardholder has contacted their card issuer to say that they had expected a refund from you but it hasn't been credited to their account.

What to do
You will need to provide proof that the refund's been processed, or evidence to show that the cardholder's not entitled to one. If you've processed it using a manual refund voucher, please supply us with the Merchant Voucher Summary (MVS) it was banked with.

If it's a point of sale refund, please check your day's trading to ensure your terminal processed the refund – as proof of this will be required. Also check your statement to make sure that the amount was debited.

Preventing it in future
Always ensure that refunds are issued back to the credit or debit card used for the transaction, don't refund by cash or cheque. And ensure that it's processed within three working days. Once you have accepted returned goods, please ensure a refund is processed promptly.


Missing imprint

Why it happens
The card issuing business believes that an imprint of the card, either manual or electronic, was not obtained on the transaction receipt and that the transaction was processed without the cardholder's permission.

What to do
We will require proof that the transaction was authorised, with a copy of a signed manual voucher or proof of delivery signed by the cardholder.

Preventing it in future
Always ensure you process manual payments promptly and keep copies of all transactions in a secure place. Seek authorisation for every transaction to cover yourself.


Missing signature / Non-card

Why it happens
The card issuer is disputing the validity of the transaction believing it was 'face to face' because a card imprint was obtained or the card was swiped through your terminal but a signature was not obtained.

What to do
If correct security checks and procedures haven't been followed and a signature has not been obtained where it was necessary, unless you can prove otherwise, we'll have no option but to debit the amount from you. You may try to contact the customer to obtain a valid payment, but this is not something we are able to help with.

Preventing it in future
Ensure that all security checks are carried out and that a signature is obtained and checked against the signature on the back of the card when required. Also make sure your staff fully understand the procedures for these transactions and the importance of following them strictly.


Non receipt of goods

Why it happens
The cardholder's contacted their card issuer stating that goods they ordered have not been received.

What to do
We will require proof that the goods have been dispatched and received by the cardholder. If you're unable to provide the required information, we may have no alternative but to debit the amount from your account.

Preventing it in future
Ensure that goods are never released to a third party, even if they claim to have been sent by the cardholder (for example, a taxi). Wherever possible, ensure a signature is taken upon delivery.


Not as described

Why it happens
The cardholder's contacted their card issuing business stating that goods or services they received weren't the same as described – either on the transaction receipt or other information that was supplied at the time of purchase. They claim to have returned the product or cancelled the service.

Preventing it in future
Ensure that any information you provide to customers, whether on your website, mail or on business premises is clear and accurate. Before a customer commits to purchasing goods or services, ensure that they fully understand what they are buying. If you have to make a substitution, make sure you communicate this to the customer in advance and confirm that they are happy and want to proceed with the purchase.

If a customer cancels a service, ensure that their details are removed promptly and that no subsequent transactions are put through on their behalf.


Processing error

Why it happens
The card issuer believes an error was made by your business when processing the transaction.


What to do
When we contact you, we'll advise you exactly what type of processing error has occurred. It could be that a sales voucher was completed instead of a refund slip, or the total figure was unclear and has resulted in the cardholder being debited the wrong amount. We will need your comments and copies of any relevant documents you may have.

Preventing it in future
Always double check each transaction before processing it and ensure your employees do the same. If using manual vouchers, make sure the correct slips are being used and that all figures are clear and legible. If you're using a PDQ machine, check that the appropriate refund or sale voucher is being used and the amount, if it's being keyed in, is correct.


Transaction exceeds amount limit

Why it happens
The card issuing business has initiated a chargeback because they believe that a self-service terminal transaction exceeded the allowed amount.


Preventing it in future

Please ensure that any customer-activated terminals are programmed only to take transactions below the value of your agreed limit. Also make sure that any customer-activated terminals are clearly labelled with the maximum transaction value for the customer's benefit.


Transaction prior to 'valid from date'

Why it happens
The card issuer initiates a chargeback when a card is used before its 'valid from date' and authorisation hasn't been obtained.

What to do
If you can prove the card used had reached its 'valid from date' or that authorisation had been obtained we'll try to defend this on your behalf. If you can't provide this proof, we may have to debit the amount back from you. If this happens, we can only suggest that you contact the customer direct to recover the payment if possible.

Preventing it in future
Always check the valid from date on cards before processing transactions. If a dates not yet valid, ask the cardholder for alternative payment.


Unauthorised multiple transactions

Why it happens
The cardholder's contacted their card issuer to say that they've been charged for more transactions than they agreed to.

What to do
We'll need proof that more than one transaction was authorised by the cardholder.

Preventing it in future
Ensure that all transactions processed are authorised by the cardholder and keep copies that will prove this, in case you receive a chargeback.

Advice for your business type

How your business can prevent chargebacks

The nature of your business and the way you accept payments will affect the measures you can take to protect your business from chargebacks. For transactions that take place online, by phone, mail order and in hotels and restaurants, we've put together some specific guidance to help you prevent chargebacks.

Since some chargebacks are unavoidable, these guidelines don't guarantee protection, but will better equip you to deal with them.


If you accept mail order payments

Mail order transactions attract a higher risk of chargebacks, and are more prone to errors. Because the card or cardholder is not present, chargebacks that arise can be difficult to defend. To help you minimise the risk to your business:

  • Call customers to confirm the card number, expiry date and other details given.
  • Always arrange delivery of goods yourself, using a reputable carrier, and obtain a signed and dated delivery note.
  • Never release goods to a third party – such as a taxi driver or messenger allegedly sent by the cardholder.
  • If a customer decides to collect the goods, cancel the original transaction, and proceed with the new transaction as a normal over-the-counter sale.
  • Ensure that your order forms have a space for a mandatory cardholder's signature, card number, expiry date, cardholder's full name and address and the security code from the signature strip on the reverse of the card
  • Store all transactions securely so you can access them at a later date, if needed.


If you take telephone orders

Phone orders are at higher risk of chargebacks because the card or cardholder isn't present and, even if you obtain authorisation, there's no guarantee of payment.

To protect your business from transaction disputes and manual errors, we recommend you:
  • Ask customers to repeat their card number, then read it back to them.
  • Arrange delivery of goods yourself, using a reputable courier and obtain a signed and dated delivery note.
  • Never release goods to a third party - such as a taxi driver or messenger even if they say they've been sent by the cardholder.
  • Make sure you record the card number, expiry date (making sure it's valid), the 3 digit CCV code, cardholder's name and address and the time and date of the conversation.


If you process point of sale payments

Ensuring that staff are careful and make relevant checks, and that you store transactional information, will help reduce the impact chargebacks can have on your business.
  • When a card's been swiped through the PDQ terminal, check that the card number on the printed voucher matches the number on the card.
  • For Visa and MasterCard credit cards check that the first four digits of the card number appear on the card under the embossed number.
  • Check the valid from and expiry dates.
  • If the card doesn't swipe or is not readable by the terminal, take a manual imprint of the card details to prove it was present at the time of the transaction. If the card number has to be keyed in, make sure the correct number is entered.
  • If obtaining a signature, always check it against the back of the card and if unsure, ask for further identification.
  • If the value of the transaction is over your floor limit, always seek authorisation to reduce the risk a chargeback.
  • Never reveal your floor limit.


If you sell online

You can take additional measures to prove authenticity of the card and cardholder:
  • Authorise every transaction.
  • Sign up to Internet Authentication for Visa, MasterCard and Maestro cards to validate the cardholder's identity.
  • Collect as much information about the customer as possible, for example, by asking customers to register before they buy.
  • Double check card details – especially expiry dates.
  • Incorporate a Modulus 10 check Digit Algorithm into your website's payment page to reduce the chances of processing an invalid card number.
  • Monitor the number and value of orders from individuals. Online fraud often involves placing a small number of modest orders to check if they'll go through, then dramatically increasing the volume and value before the fraud is discovered.
  • Double check orders from international users – as standards of regulation and security differ from one country to the next.
  • Be aware of the risk level for your products. High risk items have a resale value close to the original purchase price and are often prone to fraudulent transaction.
  • Arrange delivery through recorded post or a reputable courier and not allowing goods to be collected by a third party e.g. taxi drivers or messengers.


Advice for restaurants

Restaurants can have a high occurrence of chargebacks, so you need to be prepared and aware of the risks of:

Bill sharing

  • When customers want to split the bill, take care not to process all charges to the same card.
  • Ensure all card details are checked and transactions authorised.
  • Alteration of transaction amounts
  • Never adjust a voucher amount without the cardholder's consent.
  • Ensure the customer has authorised any gratuity added to the bill.


Taking telephone orders (for takeaway services for example)

  • Always keep a record of the cardholder's name and address
  • Remember that Electron cards cannot be processed for telephone orders
  • If it's your policy to check the card upon delivery, make sure that the account number quoted agrees with the card presented and that the signature on the card is the same as that on the voucher.


Higher risk situations

  • A transaction that's below your floor limit
  • A card with a valid from that's not been reached, or has expired
  • Make sure each card is one which your Merchant Agreement allows you to accept, like Visa, MasterCard, Maestro or JCB.


What hotels can do

If you process transactions for payment without the cardholder being present at the time, there is always a slightly increased risk of error or a future chargeback. Here's some additional guidance for businesses in the hotel industry:

Taking reservations

  • Always obtain the guest's name, address, card number and expiry date and provide a reservation code/number.
  • Confirm the booking details verbally and in writing (or email), giving details of your cancellation policy.
  • If the booking was made through a third party, such as a travel or booking agent, please ensure they advise their client of your policies.
Dealing with cancellations

  • A cancellation received 72 hours prior to the reservation date must be accepted and a cancellation code or number issued, and confirmed in writing if your guest requests this. Reservations made within 72 hours of arrival have a cancellation deadline of 6.00pm on the arrival date.
  • Provide a copy of your cancellation policy in writing to guests at the time of booking as we may request this information and proof that it's been provided if a dispute is received at a later date.
In the event of a no-show

  • For non-arrivals, you can charge one night's stay as long as you've held the room until check out time the following day.
  • It is important that the words NO SHOW, the cardholder's name, card number and expiry date are quoted when completing the transaction receipt.
Estimated authorisations

  • You're allowed to estimate the final transaction amount and receive authorisation before the guest checks out.
  • Enter the transaction via your PDQ terminal and encourage the guest to sign the voucher.
  • Your PDQ terminal has the facility to store this information until you're ready to finalise the bill.
  • At check out, if the final bill is below the authorised amount, amend the sum accordingly and process the transaction as normal.
  • If the final total has increased by more than 15%, then another authorisation code must be obtained for the difference. You must ensure you keep a note on the guest's records of all dates, codes and amounts that authorisation was obtained.
Check outs:

Always request a signature – without one on the final bill, we may unable to defend any chargebacks received at a later date.

For general enquiries

Call us on:

0844 811 6666

Monday to Friday 8am – 9pm
Saturday 8am – 7pm
Sunday 8am – 6pm

For Technical support:
Monday to Friday 8am – Midnight
Bank holidays 9am – 6pm

Or we can call you back at a time that suits you.
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