What are the roles of card brands in chargeback process?

Card brand has to play a major role when a customer files a dispute. Bank coordinates with acquirer to return money to customer in case mistake lies on merchant’s end.   Chargeback process can be said as a protection put in by the card brand to allow users to dispute if there is a conflict.

Merchants have to show the proof of transaction that has led to chargeback. The revival of chargebacks is based on the guidelines of card brand. Sometimes acquiring bank send a letter via email to alert merchant that there is a chargeback. Bank will require documentations as a proof, and that to be sent before a due date. If a merchant accepts the chargeback then just a reply will be enough, but if merchant doesn’t accept then there is a lengthy process which includes important role of card brand.

Role of Card Brand in Chargeback

Every chargeback has a particular set of entities such as cardholder, issuer, acquirer, merchant, and card network. Sometimes, all of these individuals are involved in a chargeback, and other times, some parties are taken out of the picture. Usually, cardholder is not involved in all back end processes. Certain chargebacks are handled entirely by acquirer, in a situation like this, merchants are involved just to pay the fee. Role of card brand can be divided into multiple steps:

Step 1

This is the step where cardholder files a complaint to the card brand about a transaction.

Step 2

card brand will check whether the claim made by cardholder is valid. If bank finds that the request is invalid then dispute is withdrawn and customer will be charged a processing fee.

Step 3

If bank finds that the claim is valid then credit is provided. This is where bank’s initial chargeback process begins to get credit from merchant’s bank. It is the responsibility of merchant’s bank to check whether request is valid or not.

Step 4

Merchant’s bank then do research about the chargeback and respond to card brand. If request is valid, money will be return to the cardholder, and if not then request will be declined. Once the process is completed, merchant is notified about the outcome of the chargeback.

Step 5

If there was an error then correction is sent to the card brand for re-presentment. Merchant is asked to provide documentation and other proofs. If documents are satisfactory then chargeback claim is denied, but if the documents are unsatisfactory then chargeback amount is returned to the customer.

Card brand acts as a liaison to ensure whether a chargeback is valid or not. Issuing and acquiring banks are constantly in communication. Most of the time cardholder is omitted from the whole process, and outcome is decided based on the evidence provided by the merchant.