As an ecommerce business, a certainty of life is that your merchant account will post chargebacks and retrieval requests. For some businesses these happen irregularly, for others they are a daily occurrence. Understanding the difference between chargebacks and retrieval requests will help you to deal with them quickly. This means you’ll have fewer cash flow problems and more happy customers.
What are Chargebacks?
Chargebacks are the return of payments to customers. This happens when a fraud has taken place, or more likely if there are no funds available to pay for the goods you think you’ve sold. It might also happen when your customer feels they haven’t got what they paid for.
Whenever you’re hit with chargebacks, you’ll be hit with a chargeback fee, which is why you’ll want to limit their impact on your ecommerce business.
What is a Retrieval Request?
Retrieval requests are sometimes called soft chargebacks: the card issuer request information from the ecommerce business about a transaction via the merchant account. These can because the information provided (through the payment process) is incomplete, there is a potential fraud, or a payment processing error. You’ll be expected to provide proof of authorisation.
They can also happen because the cardholder doesn’t recognise the transaction. In these situations, you’ll probably want your customer services department to contact the customer direct and find out the exact nature of the problem. Once discussed in this way, 90% of queried transactions are recognised. If there is still some dispute, it’s very likely you’ll be able to come to an amicable solution. And if there isn’t such a solution forthcoming, then issuing a refund is cheaper than having to accept a later chargeback.
Understanding the difference between chargebacks and retrieval requests saves you money
Clearly, when you receive a retrieval request, there are actions you can take to stop it escalating to a chargeback. You may be able to retain the sale in its original form or a modified state, or simply issue a refund. Acting quickly will help save you money as well as reinforce the high level of customer support you offer: and this will help retain customers and increase referrals.