Let's look at the basic life cycle of a chargeback:
Cycle of a chargeback
1. Cardholder files a chargeback. A dissatisfied customer contacts their issuing bank and requests a refund.
2. Issuer reviews/assigns a reason code to the claim. These reason codes provide an explanation as to why the consumer is disputing the transaction (e.g., "goods or services not described"). Each code has its own set of rules (submission time limits, required documentation, etc.).
3. Issuer investigates and takes action. The issuer must fully investigate the cardholder's complaint, ensuring that all regulations have been addressed and that the complaint is valid. If the cardholder has a valid complaint, the funds will be removed from the merchant's account and credited to the cardholder. Notification of the chargeback will be sent to the merchant (If the cardholder does not have a valid claim, the chargeback will simply be reversed).
4. PagueloFacil (acquirer) reviews the chargeback and takes action. The card networks (Visa, Mastercard) have created several merchant rights, including the right to dispute an illegitimate chargeback. If inaccurate claims are made, the merchant can try to recover the profits that were applied to your account. If PagueloFacil has access to convincing evidence that will invalidate the chargeback, it will act on behalf of the merchant. Otherwise, PagueloFacil will pass the chargeback to the commerce.
5. The commerce reviews the chargeback and takes measures. If the chargeback is justified, the commerce must accept the losses. However, if the merchant has enough convincing evidence, such as documentation, to demonstrate that the chargeback is not valid, the merchant can resubmit the chargeback for the issuer to review it.
6. PagueloFacil (acquirer) resubmits the chargeback. The acquirer takes the evidence provided by the merchant and disputes the chargeback, a process called pre-arbitration, on behalf of the merchant.
7. The issuer reviews the evidence and makes a final decision. If the merchant's evidence is compelling enough to refute the cardholder's claim, the transaction will post to the cardholder's account a second time. Funds that were originally deposited into the merchant's account and then removed by the chargeback will be re-deposited. However, chargeback fees or associated costs will not be reimbursed to the merchant.
If, on the other hand, the merchant's evidence does not refute the cardholder's claim, the chargeback stands. The transaction amount is permanently removed from the merchant's account.
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