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Handle chargebacks and retrieval requests for QuickBooks Payments

by Intuit Updated 1 week ago

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 (Merchant Services).

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.

If there was a chargeback on your account with Quickbooks, it’s important to note the below:

General chargeback rules

  • When signing up with Intuit Payments and accepting the terms and conditions, you are authorizing Intuit to debit your account for disputes, fees or any amount owed to Intuit.
  • Judgment in disputes is handled by the card-issuing bank and in the event the case is lost, the merchant is responsible for the balance due.
  • When Intuit attempts to collect a chargeback and the merchant refuses to pay, the outcome is then explained to a third-party agency. Once outsourced, the merchant is responsible to pay the third-party agency along with any additional fees that are added by the agency.
  • All details are covered on the QuickBooks Online Terms of Service page in the merchant payment services section under Product Specific Terms, which you can find here.

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:

Respond to a retrieval request

You may receive just a retrieval request, or a retrieval request may come in before a chargeback. Usually, this means the cardholder doesn't recognize the charge and needs more info about it.

If this happens, we'll let you know and email you the following details about the transaction in question. Use these details to find the original charge in your records:

  • First 4 and last 4 digits of the credit card
  • Transaction date
  • Transaction amount
  • Retrieval request reason
  • Respond by date
  • QuickBooks Payments case number

Note: These are the only details provided by the card issuer.

Follow the instructions in the email to send the signed merchant copy of the credit card receipt. The merchant copy is also known as the sales draft. The credit card issuer (your customer's credit card company) needs a copy of the sales draft to review.

Send the sales draft by the deadline specified in the email to avoid a chargeback.

Tip: Card Associations require merchants to keep sales drafts, on or off premises, for 3 years.

Respond to a chargeback

As a merchant, you may have an option to respond to a chargeback. This response is known as a rebuttal.

Note: You won't have this option if a retrieval request came in before the chargeback and you didn't respond to the retrieval request by the deadline.

We'll email you instructions and deadlines if you get a chargeback or retrieval notice. We include the case number, email address, fax number, and how to send your response.

We want you to be able to tell your side of the dispute. We require you to reply with a letter that directly responds to the reason for the cardholder’s dispute.

Based on the reason for the chargeback, you may also want to provide supporting documentation to back up your rebuttal letter. If you email your documentation to us, use PDF format so we get the best quality images.

Chargeback reasonSupporting documents(s)
Cardholder claims they didn't get the merchandise or servicesProof of delivery or signed pick-up.
Cardholder claims the merchandise or services received weren't as described or defectiveProof the merchandise or services matched the description.
Proof the cardholder didn't attempt to return the merchandise.
Proof of ongoing negotiations between the cardholder and the merchant.
Outside opinion from a third-party expert in support of the merchant's rebuttal.
Cardholder claims fraud or unauthorized chargeA copy of the signed receipt (if applicable).
Compelling evidence (like photographs, emails, etc.), to support the cardholder made the transaction and received the merchandise or service.
Cardholder claims there's a duplicate transactionProof the cardholder engaged in 2 separate transactions.

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).

Frequently asked questions about chargebacks and rebuttals

There are some cases when you can't challenge a chargeback. These are called no recourse cases. Here are some common causes:

  • Cancelled recurring transaction: Once a customer requests to stop billing their credit card, any charge that follows the request is subject to a chargeback with no recourse.
  • Required authorization not obtained: The customer's card is declined at the time of sale, and the sale is forced through until an authorization is obtained.
  • Non-receipt of goods/services: The merchant receives returned merchandise that wasn't delivered to the cardholder, either because of issues with the shipper, or because the cardholder refused the delivery.
  • Not as described/defective merchandise: The merchant doesn't authorize the cardholder to return merchandise that was received damaged or defective.
  • The transaction was unauthorized:
    • The cardholder claims they didn’t authorize the transaction.
    • The issuing bank certifies the customer's information doesn't match the cardholder's. This includes the name, bill-to or ship-to address, phone number, email address, or IP address.
    • The ship-to address differs from the bill-to address. This is often the case if the product is sent overseas.
    • Multiple cards were used to split a transaction into smaller amounts.
    • Funds were wired to pay for shipping costs.
  • No proof of proper disclosure:
    • The cardholder didn't sign or initial near the merchant’s return or cancellation policy to show they have read and agreed to the policy.
    • A retail merchant must have the policy printed on the sales draft below the signature line and be at least 1/4 inch in size. An e-commerce merchant must place their policy on their website and have the cardholder click to accept or agree to the terms and conditions during the checkout process. A link to the terms and conditions that takes the cardholder away from the sequence of website pages to checkout isn't considered proper disclosure.

For most disputes, the time frame is 120 days (U.S.) and 180 days (International) from the original sale or date of discovery of the issue. The time frame may vary based on the reason for the dispute.

American Express lets cardholders dispute transactions up to 1 year from the sale date.

American Express customers can issue multiple chargeback disputes or retrieval requests without limit for a transaction. They can also dispute transactions up to 1 year from the original sales date. Merchants should respond to every retrieval request to prevent a chargeback with no recourse.

When the chargeback is sent to QuickBooks Payments, the debit is automatically processed. This debit is passed to the merchant when the card-issuing bank has met all of the requirements of the chargeback. This conforms to the merchant agreement you signed or received when you signed up and activated your QuickBooks Payments account.

QuickBooks Payments has no contact with the cardholder. We represent you, the merchant. We provide you with accurate info so you can address any dispute you receive.

Our goal is to help you resolve these disputes in your favour. All remedies for a chargeback must follow the Card Association rules and regulations.

An authorization code doesn’t guarantee you won't get a chargeback, because a customer can dispute a transaction for any reason. An authorization code only checks that the card is in good standing, hasn't been reported lost or compromised at the time of the sale, and has sufficient funds available.

You may also get a chargeback if the full card number turns out to be invalid. For some transactions, especially smaller ones, the system only checks the first six digits of a card (which identifies the bank) at the time of the sale, and provides authorization on behalf of the card issuer.

Your best option is to get cardholder signatures. Have them sign your cancellation or return policy on all orders. It's also very important to manage the customer’s expectations up front. Document your efforts and work with your customers to resolve issues.

If a chargeback is valid, the chargeback amount will be based on the most current CAD exchange rate on the day the final decision is made. The rate is not for the original date of the transaction.

The card associations set the time frames for the steps of the process. This lets both sides (the merchant and Intuit, and the cardholder and card issuing bank) to collect and provide documents for review.

Pre-arbitration is the third step in a chargeback and occurs when the cardholder still wants to dispute the charge for the second time. Usually, cardholders have 120 calendar days from the date of expected delivery of services/merchandise to dispute a transaction. This may be different from the sale date.

Once a merchant responds with the documentation to the chargeback, it can take up to 90 calendar days to complete the chargeback cycle. If the case goes to arbitration, it’ll take more time for it to be reviewed and processed.

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