Learn what a chargeback is and what to do if you get one.
A chargeback is when a transaction you processed gets disputed and the money goes back to the payer. In other words, the sale is "charged back" to you.
Sometimes a retrieval request will come before a chargeback. A retrieval request is a request from the card-issuing bank for documentation about the sale. A common reason for a retrieval request is that the cardholder doesn't recognize the charge.
Chargebacks can happen for a variety of reasons. They may be the result of a mistake, fraud, or an unhappy customer. If you don't handle them properly, they can cost you time and money. Here’s what to do if you get a chargeback for a payment you processed with QuickBooks Payments.
Important: If you receive a chargeback, don't issue a credit to the cardholder’s (your customer’s) card or any other type of refund, such as cheque or cash. We'll show you how to handle everything properly.
Step 1: What to do when you get a chargeback
When a customer disputes a charge with their bank or credit card company, the financial institution notifies QuickBooks Payments.
QuickBooks checks for credits to the card when the chargeback is received. There are cases when we can't match the chargeback to the credit:
- If the sale and refund amounts are different.
- If you (the merchant) issue a credit to the card after the chargeback has already been posted to your account. If this happens, send a copy of the credit issued to the card or proof that a refund was given (such as the front and back copy of the cashed refund cheque).
- If you issue a refund outside your QuickBooks Payments. If this happens, send proof of that payment to us.
If you didn't give a credit, or we can't match the credit to the chargeback, the customer's card issuer credits the original charge amount to the cardholder. The credited amount, plus a $25 fee, is then debited to you, the merchant. This fee isn't a penalty. It's used to cover related costs.
When this happens, we'll email you about chargeback notices or retrieval requests. Don't worry, the email will give you clear instructions for what to do next.
Step 2: How to respond
Always follow the instructions in the email we send you. Here are general guidelines for what to do if you get a chargeback notice or a retrieval request:
Note: There are page limits for merchant responses set by the card associations. MasterCard is 15 pages, Visa is 21 pages, Discover is 2 pages, and American Express is 50 pages.
Once we get your documents, we will send you an email confirmation within 1- 2 business days.
Step 3: Talk to customers during the process
Keep trying to resolve any issues your customer may have. Keep records of these interactions. If they feel you’ve resolved the situation, ask them to write you a letter stating that, and send it with your documents as described in Step 2. The customer should also contact their card issuing bank to cancel the chargeback.
If your customer tells you they cancelled the chargeback, request a copy of the letter of retraction their bank provides. It should be on the bank’s letterhead and state the dispute has been dropped or resolved in the merchant’s favour. Send the letter to us as part of your supporting documentation.
Step 4: Follow up on your rebuttal
Once you send your documents, it can take up to 90 days for the card issuer to reach a decision. We'll send you a decision letter by email.
If the issuing bank decides you can't dispute the chargeback, you’ll receive a no-recourse notice that explains why.
The bank makes its decision based on the evidence presented by both you (the merchant) and your customer (the cardholder).