Summary: This article reviews how chargebacks function on CentimePay transactions along with best practices.
Article Contains
What is a Chargeback?
A chargeback is initiated by the issuing bank/card issuer on behalf of their customer to collect funds back after a transaction has been completed. When this occurs, Centime will receive a notification from the merchant acquirer and notify the client of the chargeback request raised by their customer.
Credit Card Chargebacks
The timeframe (in calendar days) to exercise and defend a chargeback:
Source: Adyen
ACH Chargebacks
When Centime receives a notification for chargeback from the merchant acquirer, the balance in the merchant account will become a negative balance corresponding to the chargeback amount and funds will be held in the merchant account from the subsequent payments until the balance in the account becomes $0.
Chargeback Outcomes
When a dispute is raised, one of the following outcomes will occur:
Positive outcome of the dispute in favor of the client ensures no disruption to the payout.
Negative outcome in favor of the client’s customer will lead to a negative balance in the client's merchant account corresponding to the chargeback amount and funds will be held in the merchant account from the subsequent payments until the balance in the account becomes $0.
Centime charges $25 per chargeback which will be reflected in the subsequent Centime monthly client invoice.
A Negative Merchant Account
Chargebacks can sometimes result in your merchant account with Centime becoming negative. This occurs when you receive funds through a CentimePay payout and then a clawback happens after a chargeback is raised by your customer.
When this happens, you will not receive CentimePay payouts until the account is made whole again. This can happen in a few ways:
- Customers keep paying invoices through CentimePay and the payouts zero out the merchant account
- Your customer cancels the chargeback
- You transfer funds back into the merchant account (see below)
Transfer funds to Merchant Account
Transferring funds into the merchant account is done through your financial institution. You must first acquire the correct bank account and reference information for the transfer.
First, request a unique payment URL from your Customer Success Manager. Navigate to the URL and select "Bank Transfer (US)" and then click "Continue to Bank Transfer (US).
Please take note of the reference information by either writing it down, printing the page, or sending a copy to your email. These are the details that you need to make the transfer to the merchant account from your financial institution. Once these funds clear, your merchant account will be made whole again and you will begin receiving CentimePay payouts.
Chargeback Best Practices
Chargebacks are best avoided and disputes should ideally be handled by clients and their customers before they become a chargeback. Typically with these disputes, our customers will either refund their customer or issue a credit memo without involving the merchant acquirer or initiating a chargeback at all.
In addition to accruing fees, lost chargeback disputes can be damaging to a business’ reputation. Payment service providers and financial institutions can view your chargeback rate and use it as a means to determine how risky your business is to work with and deny merchant services.
If you do incur a chargeback, the best thing to do is to resolve the issue with your customer and have them cancel the chargeback with their credit card company or bank.
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