When a cardholder initiates a chargeback dispute through their issuing bank or credit card processor, there are a series of steps that a business is required to take in order to state its case. They go through this process to possibly prevent a refund to the customer for the goods or service, as well as an increase in processing fees for future transactions (due to the elevated risk for the merchant as deemed by the processor).

The financial term to summarize what the business has to do is ‘representment’ or the assembly of ‘compelling evidence and documentation’ to support the merchant’s side of the interaction. What’s often not discussed – or properly quantified within an income statement – is the time that the accounting or finance department spends on this preparation.

Let’s break this down so that you have an accurate picture of what’s involved:

  1. The merchant is given the chargeback case from its acquiring bank or directly from the processor, which also includes a ‘reason code’ (pertaining to the rationale given by the customer for initiating the dispute) that will dictate the type of evidence the business must assembly.
  2. During the preparation phase, the merchant must go through its records to find all pertinent receipts, sales or delivery confirmation documents, proof of on-premises purchases, forms filled out by the customer, additional communications with the customer (emails, texts, faxes) and any other documents that show that the business acted in good faith and under the explicit authorization of the customer.
  3. Once packaged, all this supportive evidence must also be accompanied by a rebuttal letter summarizing the merchant’s case.

As should be clear, there’s a lot of work for a single chargeback dispute, conservatively estimated at around 30 minutes of time by a member of the accounting team to package and submit. (We’ll leave it to you to figure out the dollar value lost based on salaries or wages at your company).

Moreover, this work can be deemed as ‘disruptive’, meaning that it interrupts the flow of other, and often more important, tasks, thereby dampening the operational efficiency of an accounting or finance departments charged with preparing the evidence. Representment has a time limit, after all, with merchants typically given 60 or 90 days by the processor to submit their cases.

With all this mind, a question you may be asking is: why bother? Even with proper representment, a merchant’s chances of winning a chargeback dispute are not favorable, so why not forego this difficult process and simply accept these refunded amounts as a natural cost of doing business?

The answer here is that not preparing evidence will ultimately hurt the merchant because banks and credit card companies will then deem said business as higher risk. In other words, a merchant that doesn’t take the time to defend itself is most likely guilty and thus a hazardous venture for financial negotiators, resulting in higher processing fees for all subsequent transactions.

Given the time required for representment as well as the consequences of not engaging in this process, it benefits every business to limit their exposure to chargebacks with payment security products like TransForm, especially for card-not-present transactions where the burden of proof is substantially higher than for in-person authorizations.

Learn more about TransForm

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Toll-Free 877-423-3001

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Halifax, Nova Scotia


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