A chargeback is a form of consumer protection that enables cardholders to file a dispute against a merchant.
There are two types of chargeback disputes: a fraud chargeback, and a service chargeback.
A fraud chargeback relates to a transaction from a card that has been compromised. For example:
- The customer does not recognise the merchant on their card account statement.
- The customer disputes the legitimacy of the transaction on their statement with the merchant.
- The customer has had a transaction placed on a stolen credit card.
A service chargeback relates to a transaction related to goods or services not delivered as originally sold. For example:
- The merchant does not accept a return of goods.
- The merchant does not deliver the goods or services as originally sold.
How is a chargeback issued?
Cardholders typically engage directly with their bank (known as the issuing bank) to lodge a chargeback request.
How can I avoid chargebacks?
The best way to avoid chargebacks is to maintain best-practice payment and business processes:
- Avoid card not present (manually entered) payments when the customer is with you in-store, and use Zeller Terminal whenever possible.
- Use either the contactless or chip insert payment methods.
If you are processing card not present (manually entered) payments with customers, use customer verification methods, such as:
- obtaining signed delivery slips from companies such as Australia Post or DHL
- checking the customer's photo identification against their credit card
- checking that the signature on the card used for payment matches the signature on the receipt of goods
If you are dealing with high-value goods, you should:
- have clear and binding service terms that explain customer liability
- have a clear refund policy
- have signed contracts or agreements
The most important thing in fighting a chargeback is evidence. The more evidence you can provide, the more likely you will be to win a chargeback dispute.
While you can never completely avoid chargebacks, you can put yourself in the best possible position for a positive outcome.
What will happen if a customer disputes one of my payments?
Zeller will notify you if one of your customers lodges a chargeback with their card/card issuer, via email.
When a chargeback is issued, Zeller will place a temporary hold on the amount associated with the chargeback while the process takes place. Zeller will not return these funds to the customer's bank or to the merchant until a decision has been finalised.
Chargebacks can take up to 90 days to resolve with a bank, and the decision does lie solely with the customer's bank.
If you are notified that a chargeback has been filed against your business, you have two options.
Option 1 - Challenge the dispute
If you want to challenge the dispute, and try to retain the funds from your customer, you will need to reply to our email with as much documentation as possible, showing that it's a legitimate transaction.
Once Zeller has sufficient information to provide to the card issuer, the challenge will be submitted to the customer's card issuer.
As mentioned above, this process can take up to 90 days. Once Zeller has been notified of the final decision, you will be advised via email.
Option 2 - Accept the dispute
If you do not want to challenge the dispute, and have the funds returned to the cardholder, then you will need to reply to the email from Zeller, advising that you accept the dispute.
If you do not reply to the chargeback notification within 14 days of us sending it, the dispute will be automatically accepted.
What information can I supply?
As above, there are records you should retain to increase the likelihood of good chargeback results, such as:
- signed delivery slips from companies such as Australia Post or DHL
- signed contracts or agreements outlining service agreements
- signed invoices outlining the cost of the product or service
What happens if I lose a chargeback?
If a chargeback is lost, then the cardholder will retain the funds from the original transaction.
Unfortunately, the decision made by the cardholder's bank is final, and cannot be overturned by Zeller.