CHB – not as simple as you may think

Post 5 of 11
CHB – not as simple as you may think

We all know how risky chargebacks are.

They are being counted against us, they risk our operation, and may even cause closure of accounts, if the chargeback ratios are too high.

But there is more to it than just chargebacks, as we’re about to explain.





The chargeback process has several stages:

  • Chargeback
  • Representment
  • Pre-arbitration
  • Arbitration

An unsatisfied client has the right to seek compensation from his CC Company or his bank.

When the Bank or CC Company return the funds to the client, this is a chargeback. Chargebacks are being counted against the merchant, and a high chargeback ratio may cause the account to be suspended or terminated.

There are a lot of specific chargeback reasons, which can be separated into 2 main groups:

non-authorization, and service related.


Non-authorization means that the client does not recognize the transaction, claims that he did not authorize it, claims that he was charged twice by error, etc.

Service related chargebacks may include claims that the client did not receive the product or service he paid for, that the service was not as described, that he did not receive a refund he asked for, etc.

If the merchant believes the chargeback has no merit and wish to enter a representment process and fight the chargeback, they need to submit a dispute within a predefined time frame set by the different organizations.

The representment process should be taken very seriously and is fully dependent on strong evidence. You need to send documents that relate to the CB reason and disprove it.

Once the representment is submitted, it is up to the issuer to decide if the evidence documents sent are strong enough, in which case the chargeback will be reversed, funds will be deducted from the client and sent back to the merchant. Alternatively, if the issuer decided the dispute is insufficient and doesn’t disprove the client’s claims, the representment will be denied, and the chargeback will stand.

In case of a reversal, the client can dispute the issuer’s decision, and submit a second chargeback. This begins a pre-arbitration process, and the chargeback is counted again against the merchant. Funds are taken again from the merchant and sent to the client. The merchant may decide to allow the chargeback to stand, or decide to fight it again. They have a limited time to respond, and they would need to submit different documents than they did during the original chargeback process.

If the case was not decided in the merchant’s favor in the pre-arbitration, the merchant may decide to go to arbitration, and present the case to the Card Association for review.

The card association will only check whether rules and regulations were followed, they will not intervene in any other dispute between the merchant and client. The arbitration process is expensive and carries a high fee, which is to be paid by the losing side. That’s why it is a route not commonly chosen. It should only be used if the original transaction amount is very high, or if the issue relates to rules and regulations, and the merchant is absolutely sure they are going to win.


chb process pic

This article was written by admin_algocharge