Reach chargeback and disputes guide
Learn how chargebacks and disputes work and how Reach can help.
A chargeback is when a cardholder (the customer) contacts their issuing bank to question a charge or reverse a transaction. Comparatively, if the customer completes a transaction through a payment channel like PayPal, they can attempt to reverse the charge through a dispute. A chargeback or dispute can result from fraud, an unrecognized charge, a defective product, or a failure to receive a service or good.
Chargebacks and disputes can consume profits, time, and resources. A supplier that has a high chargeback rate can expect:
- Money out the window: You lose the sale and the product (especially with fraud), and get hit with non-refundable chargeback fees.
- Card network troubles: Mastercard and Visa are watching! If your chargebacks are too high, you could face hefty fines, audits, and even lose the ability to process card payments entirely.
- A strain on business: If rates are too high, customers and financial partners won't trust you as much. Plus, dealing with chargebacks is a significant time and resource drain for your team.
Prevention strategies, proper and timely responses, and effective management practices can help you resolve disputes smoothly and maintain positive customer relationships.
Learn more about chargebacks and the different dispute processes.
Learn how to build a representment and give yourself the best chance of winning a chargeback or dispute.
Learn how to prevent a chargeback and the importance maintaining a low chargeback ratio.
How does Reach help?
Reach's role in the chargeback and dispute process
As the Merchant of Record (MoR), Reach is the legal party responsible for the transaction. As your intermediary with payment networks, Reach handles the chargeback process on your behalf. We’ll ensure you’re notified of any chargebacks and manage the submission of your defense material within the stipulated representment window. Furthermore, we’ll provide strategic insights to help you refine your representment, ultimately boosting your likelihood of a successful dispute outcome.
How will you be notified of a chargeback?
Chargeback and dispute notifications
Reach is notified of a chargeback or dispute, then sends the supplier a chargeback notification via email. All communications regarding the case will take place in the same email thread as the initial notification.
The notification contains all the necessary details to understand the case, such as:
- Case & order IDs: Case number, order number, and merchant ID.
- Transaction details: Transaction date, transaction amount, and chargeback amount.
- Customer Information: The customer's name, email, and payment method.
- Dispute rationale: Reason for chargeback and the chargeback reason code.
- Deadlines: The date the case was received and the Reply Due Date.
The supplier must respond to the notification before the indicated Reply Due Date, whether they accept the case or intend to fight the chargeback.
Key terms
Chargebacks and disputes can be confusing, but understanding the terms and parties involved in the process can help you effectively navigate cases and ensure good communication among everyone involved.
A cardholder contacts their financial institution (issuing bank) in an effort to reverse a transaction. A chargeback is different then a dispute. A chargeback is associated with the card scheme while a dispute is associated with a payment method.
Disputes include PayPal disputes and are associated with a payment method rather then a card scheme. Similar to a chargeback, a dispute is a disagreement with a transaction charge that may result in money being returned to the customer.
The customer who initiates the chargeback. If the customer suspects fraud or feels the supplier did not uphold their end of the transaction (for example if the product or service is not as promised), they may report the transaction to their bank, describing the issue and requesting the transaction be reversed.
As a client of Reach, you "supply" the goods or services that Reach sells as the Merchant of Record (MoR). Hence the business that supplies the goods or services is refered to as the supplier, and Reach is refered to as the merchant.
The acquiring bank recieves the transaction amount from the payment service provider in a Reach owned account. Reach then pays out the supplier. The issuing bank is the customer's bank (i.e. the bank that issued the customer's card). The issuing bank is the deciding party in chargeback cases.
The payment service provider help process transactions. A chargeback will first be brought to PSP's attention by the issuing bank. The PSP then notifies Reach, and finally Reach notifies the supplier.
A chargeback notification is sent to the supplier from Reach, notifying them of a new chargeback or dispute. It will contain all the essential information needed to respond to the chargeback or dispute.
The PayPal Resolution Center provides a communication channel where suppliers and customers can work to resolve PayPal disputes amicably. The resolution may include options such as refunds, replacements, or discounts before escalating the matter to a formal claim. Reach will handle communications with the PayPal Resolution Center on the supplier's behalf.
Updated 4 months ago
What’s Next
Contact Reach support if you have any questions or need assistance with the chargeback process.