Excessive Chargebacks, Credits, & Disputes

A cardholder may dispute a sale within 60 days of when his or her monthly statement is mailed. If the dispute is filed and awarded, a chargeback occurs. Subsequently, the cardholder's bank (issuer) reverses the disputed credit card transaction back to the merchant bank (acquirer). The merchant bank, then, charges the transaction back to the merchant account and the merchant is financially responsible. Excessive chargebacks (more than 1% of 1 month's sales volume) indicates risk exposure for the merchant, and ultimately may cause the termination of a merchant account and MATCH listing of the merchant.

Most chargebacks can be disputed, though some cannot. MasterCard, Visa, American Express, and Discover each have their own guidelines for disputing chargebacks. A merchant may make a second presentment for payment of the sales transaction.

A credit occurs when the merchant returns the value or partial value of a transaction back to the cardholder's credit card. Credits result from exchanges, returns, dissatisfied customers or a merchant's attempt to avoid chargebacks.

Excessive credits (more than 1% of 1 month sales volume) are viewed as a sign of high risk & loss exposure in a merchant account; and as concealed chargebacks.