Disputing a chargeback is a meticulous process that requires a merchant to invest considerable effort and attention to detail. Initially, the merchant needs to review the chargeback notification thoroughly to understand the reason for the dispute, which usually takes around 15-30 minutes. Next, gathering evidence is one of the most time-consuming steps, often taking 1 to 3 hours, as it involves collecting transaction receipts, proof of delivery, customer communications, and any other relevant documentation that supports the legitimacy of the transaction.
Once the evidence is gathered, the merchant must prepare a detailed response. Crafting a compelling rebuttal letter that clearly explains why the chargeback is unwarranted and organizing the evidence to present a strong case can take another 1 to 2 hours. During this time, the merchant may also need to fill out specific forms required by the acquirer or card network.
Submitting the response and following up with the acquirer to ensure that all required information has been received and is being processed correctly can add another 30 to 60 minutes. It’s essential for the merchant to keep track of the dispute’s progress and be prepared to provide additional information if requested by the card issuer.
Throughout the process, effective communication with the acquirer is crucial. This might involve several phone calls or emails, each lasting 10-15 minutes, to ensure all parties are aligned and that the dispute is moving forward. Maintaining thorough records and having a systematic approach to managing chargebacks can significantly streamline this process.
In total, while the active time a merchant spends will be between 2 to 5 hours. The overall timeline from notification to resolution can span several weeks to months.
FAQs
On average, the chargeback rate is 0.5% of total transactions result in a chargeback. High risk industries, like travel, have around a 1.93% as a chargeback rate. It's estimated that 48% of chargebacks are fraud-related. A merchant generally needs to spend between 2 to 5 hours to dispute a chargeback.
What are the statistics for chargebacks? ›
In 2021, individual chargeback counts ranged from 23 disputes a year to 77,331. Annual sales ranged from $19,000 to $379,000,000. The 2021 data was generated from 81 million transactions, 1.3 million chargebacks, 658,000 prevention alerts, and 206,000 order validation cases.
How often are chargebacks successful? ›
99.9% of the time, if the charge is fraudulent, the merchant will not respond to the notice, and after a period of time, the bank will reverse the transaction (plus charge the merchant a fee).
What percentage of chargebacks do merchants win? ›
Merchants can and should take various steps to prevent chargebacks and successfully dispute invalid claims. Implementing fraud detection tools and actively fighting invalid chargebacks can significantly reduce the impact of chargebacks on a business. 32% The chargeback win rate average was 32% in 2021.
Do merchants ever win chargeback disputes? ›
Compelling evidence: If you have strong compelling evidence that shows the customer's dispute is unwarranted, then you have a good chance of winning the chargeback dispute and keeping the sales revenue (because the consumer won't receive the chargeback refund).
How much do businesses lose in chargebacks? ›
Regardless of a consumer's intent, chargebacks cost businesses. Research suggests that chargebacks are a $125 billion problem, and for every $100 of chargebacks, companies lose $240 in expenses such as merchandise, shipping and fees.
What industry has the most chargebacks? ›
Chargeback Fraud by Industry
In general, merchants who deal with card-not-present transactions (selling online, via links, or QR codes) are at higher risk of chargeback fraud, and experience the highest rates of chargebacks. The education and training industry – at 1.02% – has the highest chargeback rates.
Why do companies hate chargebacks? ›
Companies despise them for several reasons. They not only result in lost revenue but also involve additional fees, consume valuable time, and can damage the reputation of a business. Moreover, high chargeback ratios can lead to higher processing fees or even the termination of the ability to accept credit cards.
What is the success rate of credit disputes? ›
You might not always get a fair outcome when you dispute a chargeback, but you can increase your chances of winning by providing the right documents. Per our experience, if you do everything right, you can expect a 65% to 75% success rate.
Do chargebacks usually work? ›
A chargeback won't always be settled in your favor, though. Merchants do have the right to dispute your claim, and you may still wind up paying for the transaction plus interest. You also shouldn't dispute a transaction simply because you don't want to pay—that's fraud.
Merchants are often responsible for the chargeback costs—including both refunding the purchase and any associated fees. Here's a look at the impact chargebacks have on merchants: Lost revenue, as merchants generally are obligated to refund the customer's purchase when a chargeback is granted.
What is chargeback win rate? ›
Jessica Velasco | Friday, February 16th, 2024 | 14 minutes. Chargeback win rate is a calculation that compares the number of successful chargeback responses to the number of cases fought.
What is a normal chargeback rate? ›
For merchants and payment processors, monitoring and managing chargeback rates is crucial as they directly impact financial stability, customer trust, and overall business operations. The average chargeback rate is 0.60% across all industries.
How often do people win chargebacks? ›
Chargeback Win Rate
On average, merchants win approximately 32 out of every 100 chargebacks they decide to contest. This means that if you're a merchant dealing with 100 chargebacks, you can typically expect to successfully recover funds from around 32 of those disputes.
Who decides who wins a chargeback? ›
The issuer (cardholder's bank) is responsible for determining the winner and loser, but your processor inspects the case first. Only certain cases are forwarded on to the issuer for decisioning. If your chargeback response doesn't advance, you can't win.
Is it hard to win a chargeback? ›
Considering that this mechanism was created for customer protection, winning a chargeback dispute can be a really challenging and exhausting task for businesses. Implement a secure Payment Gateway to ensure that they have full control over their payment logic.
What is the ideal chargeback ratio? ›
The industry standard chargeback ratio threshold is under 1% (i.e. less than 1 chargeback per 100 payments).
What is the risk of chargeback? ›
For businesses, chargebacks can result in financial losses, damage to their reputation, higher fees from payment processors, and even losing the ability to accept credit card payments.
