Understanding the Chargeback Process

Chargebacks can be frustrating, especially if you believe the transaction in question was processed correctly. At Vantage Card Services, we want to ensure you understand how chargebacks work, the difference between common outcomes, and the best practices for responding promptly to protect your business.

What Is a Chargeback?

A chargeback occurs when a cardholder disputes a transaction with their issuing bank. The bank reverses the funds from your merchant account while the claim is investigated. This process is governed by card brand rules (Visa, Mastercard, etc.) and is time-sensitive.

Chargeback Outcomes: Reversal vs. Cancellation

• Chargeback Reversal

  This means the issuing bank has decided in your favor after reviewing the evidence you provided. The previously withdrawn funds are returned to your merchant account.

• Cancelled Chargeback

  This means the cardholder or issuing bank withdrew the dispute before the investigation was complete—often because the cardholder recognized the transaction or resolved the issue directly with you. Funds are returned to your account.

While both result in you getting the funds back, the path is different:

• A reversal means you won the case after defending it.
• A cancellation means the case was dropped before a decision.

What to Do if You Believe a Chargeback Is Incorrect

If you believe a chargeback is invalid or due to a misunderstanding, respond quickly—deadlines are strict and typically only a few days.

Steps to take:

1. Check for Notification
   • Log into your merchant portal to view any open chargebacks.

   • Monitor your email regularly—notifications are sent to the contact email on file.

     Review the Chargeback Details

   • Note the reason code and the disputed amount.

   • Gather supporting evidence such as signed receipts, delivery confirmation, invoices, or communication with the customer.

     Respond Through the Correct Channel

   • Follow the instructions in your notification or within your portal to submit your documentation.
   • Ensure you meet the stated deadline—late submissions will not be considered by the card brands.

Why You Should NOT Block the Withdrawal of the Initial Chargeback

When a chargeback is initiated, the disputed amount is automatically debited from your merchant account. Blocking or reversing this withdrawal does not stop the chargeback—it only creates an unpaid debit on your merchant account.

Consequences of blocking the withdrawal:

• The unpaid debit could be sent to collections.
• A collection item on your merchant account can trigger a funding hold, meaning all or part of your future deposits could be withheld until the balance is paid.
• It may impact your business’s ability to continue processing transactions with your current account.

Bottom line: Always allow the debit to occur and use the chargeback process to dispute it, rather than trying to stop the withdrawal.

Best Practices for Handling Chargebacks

• Act Quickly – Time limits are strict; missing them forfeits your right to dispute.
• Keep Complete Records – Store signed receipts, order confirmations, tracking numbers, and communication logs for at least 18 months.
• Communicate with Customers Early – Many disputes can be avoided by resolving issues directly before the customer contacts their bank.
• Monitor Your Account Regularly – Log into your merchant portal and review statements to spot chargebacks early.
• Respond Professionally – Keep documentation factual and organized. Avoid emotional language.
• Follow the Process to the End – Even if you believe the case is simple, card brand rules must be followed to secure a reversal.

Key Takeaway

Chargebacks are part of doing business in card payments. The best defense is a prompt, thorough, and well-documented response. Always allow the chargeback debit to occur, and use the proper dispute channels to present your case. By following best practices and keeping organized records, you improve your chances of winning disputes and protecting your business from unnecessary losses.

If you receive a chargeback notification and need help understanding the reason code or the next steps, contact Vantage Card Services Client Support. We’re here to guide you through the process and help you submit the strongest possible defense.