Online Payments (eCommerce)

The Representment Process: How to Fight Chargebacks

Chargebacks are common in ecommerce, designed to protect consumers from unauthorized transactions or disputes with merchants.

They allow customers to contest transactions directly with their bank, seeking reimbursement for purchases they find invalid or unsatisfactory. While chargebacks might seem like a headache for merchants, they can actually shield businesses from fraud and protect against unfounded claims when managed well.

In this article, we’ll explore the representment process to learn how to effectively respond to disputed purchases and fight chargebacks.

What’s a Chargeback?

As mentioned above, a chargeback is a form of protection banks provide for customers to file complaints against transactions made on their statements.

Merchants must remember that chargebacks come with a cost, including the time and effort needed to dispute them. A higher chargeback rate leads to a higher chargeback ratio, resulting in more penalties for the merchant.

The situation gets more complicated when businesses deal with fraudulent chargebacks, which are extremely difficult to win, even if a merchant provides all the relevant documentation and evidence.

Therefore, doing everything possible to cut back on chargebacks is essential. However, in some cases, they are unavoidable — that’s where the representment process comes into play.

Disputing Chargebacks Step-By-Step

Disputing chargebacks is rather complex and requires action from each party involved – the cardholder, the merchant, the issuing bank, the card network, the acquiring bank, the payment gateway, and a merchant account.

Here is a step-by-step breakdown of how it looks like:

The chargeback is initiated after the product or service is paid for, and the customer is unhappy with their purchase, falls victim to fraud, or simply changes their mind.
This dissatisfaction prompts the customer to contact their issuing bank and initiate a chargeback. Unlike a traditional refund, where the customer contacts the merchant directly, disputing a charge involves asking their bank to “remove” funds from the merchant’s account and return them to the customer’s account.
The chargeback is then sent to the card organization and the acquirer. (Note for merchants: At this point in the process, a chargeback fee must be paid, and it’s definitely on the merchant. The exact fee level depends on the contract.)
Upon receipt of the chargeback, it’s time for the merchant to show their side of the story. They must gather all the relevant documentation that may come in handy to win the chargeback dispute. This is exactly where the representment process begins. (Note for merchants: Joining forces with the payment gateway can take some of the burden away.)
Once the documentation is completed, all the receipts, shipping proofs, logs, signatures, and other relevant evidence are uploaded to the representment form, and the form is submitted to the acquirer for review.
Subsequently, the representment form undergoes evaluation by the issuing bank, culminating in a final judgment regarding the validity of the chargeback.

If the merchant provides sufficient documentation, the cardholder may accept this evidence, leading the issuer to reject the chargeback. Unfortunately, this is one of two possible scenarios. Complications may arise if the customer remains dissatisfied with the outcome.

What if the Cardholder Doesn’t Want to Let It Go?

In such a case, they can decide to file for pre-arbitration. Unfortunately, this results in an additional cost for the merchant, and, again, its value depends on the contract details and the card network conditions.

Pre-arbitration is not the final step. If the outcome is still unsatisfactory for any party, they can file for final arbitration. Like pre-arbitration, this stage involves an even higher penalty for the losing party, so merchants must be prepared to take this risk.

The arbitration process tends to be more time-consuming and expensive than other forms of dispute resolution. For this reason, arbitration is typically reserved for transactions involving significant amounts of money or assets.

Increase Your Chances for Winning a Dispute

Winning a chargeback dispute is never guaranteed, but merchants can take steps to increase their chances of success.

The most important step is to gather as much evidence as possible to support the case. Businesses should organize the evidence in a clear, easy-to-follow manner and send all the documents as a single PDF file to their acquirer.

To streamline this process, it’s advisable to use a standardized representment form, such as the one created by Shift4.

What documents should merchants gather to support their ground during the representment process? Anything including the product description and URL, customer information, signatures, billing addresses, receipts, communication records, and any other information that might come in handy or be relevant.

For physical products, merchants must also provide shipping information, like the shipping address, delivery date, shipping documents, and tracking numbers.

Proof that the customer has already used the product will be necessary for digital products. This can be done by providing server logs, download history, or other relevant proof of usage.

When it comes to disputing chargebacks, the more is the better. The representment process is the only chance for merchants to avoid chargeback-related costs, so there’s never too much evidence to prove the transaction was legitimate.

For more guidance on how to fight chargebacks, avoid pitfalls and seamlessly navigate throughout the process, check our blog post unveiling common mistakes merchants make when fighting chargebacks.

Prevention Is Better Than Cure

Participating, engaging, and presenting detailed evidence are the top priorities for businesses during representment. But that’s not enough.

Merchants can take a few extra steps to not only win disputes but also handle unwarranted chargebacks effectively. To increase their chances of success, consider the following tips:

Act and do it quickly: Delayed response can result in losing the chargeback dispute; therefore, merchants need to have a process in place to handle chargebacks as soon as they receive them.
Get familiar with the reason codes: Reason codes provide information about the cause of the chargeback, helping merchants understand what went wrong and how to prevent it in the future.
Stay up-to-date with current regulations: Knowing and understanding the most recent regulations is critical. Compliance must be ensured for every transaction, as regulations can vary by industry and location.
Be thorough when analyzing evidence: All evidence submitted in the chargeback dispute must undergo careful analysis to ensure it sufficiently supports the case and proves the legitimacy of the transaction.
Communicate with customers: Ensuring customer satisfaction with their purchases and offering a platform for them to express concerns is the simplest method to minimize the risk of chargebacks.
Ensure easy-to-identify transaction descriptors: Clear transaction descriptors help customers identify their purchases and avoid filing chargebacks due to unrecognized transactions.
Bet on fraud prevention: Robust and up-to-date fraud prevention features like 3D Secure, fraud scoring, tokenization, blacklisting, and many other sales-friendly tools are indispensable when safeguarding businesses from unauthorized activities and preventing chargebacks from occurring.
Analyze data: Merchants should analyze their transaction data to identify patterns and trends, enabling them to refine their chargeback strategy. This proactive approach allows them to pinpoint the root causes of chargebacks and take necessary steps to address them effectively.

By implementing the tips mentioned above, merchants can save their business from unnecessary strain, recover maximum revenue, and avoid time-consuming and costly procedures.

Not to mention, they can acquire new knowledge and skills that will enhance their business performance and lead to greater success.

Win Disputes With the Comprehensive Representment Process

It is evident that chargebacks can have a significant impact on a merchant’s bottom line, reputation, and growth prospects.

However, with the right approach and a thorough understanding of the representment process, merchants can recover revenue and protect their business from chargeback-related losses.

Needless to say, it’s easier to do so when partnering with a top-notch payment provider that offers advanced features like card authorization and capture, powerful anti-fraud mechanisms, and, most importantly, 3D Secure, shifting the liability from the acquirer to the issuing bank.

Don’t let chargebacks hold you back! Watch the video below to learn all the nitty-gritty of the representment process. And if you’re ready to take your business to the next level and maximize your revenue potential, contact us today, and let’s make your business thrive!