Understanding Chargebacks

This topic explains what chargebacks are and why they occur, and some information to prevent chargebacks from occurring. 

What are chargebacks?

A chargeback occurs when a credit or a payment from a transaction, for which an authorization may have been provided, is reversed. It may result from a cardholder dispute, or when proper acceptance or authorization procedures were not followed. These adjustments are processed to your account automatically and a notification is sent to you through Merchant Direct Message Centre. 

In some cases, chargebacks can be reversed if you supply proper documentation within the strict specified timeframes set out in your Merchant Agreement. If you receive a chargeback adjustment advice, we recommend that you respond to it immediately. The adjustment advice is accompanied with clear instructions on what information you will need to supply in order to refute the chargeback. If you need assistance or information pertaining to a chargeback, call Moneris Customer Care at 1-866-319-7450.

Important standards

The information in this section is designed to provide you with payment acceptance standards that can help reduce the frequency of chargebacks at your business. 

• All face-to-face transactions are authorized through your POS terminal. The card should be inserted into the POS Device for the cardholder to enter a PIN as the card verification method, or the cardholder waves/taps the card on the contactless enabled terminal. The card should not be swiped unless instructed, and manually-entered card information should not be used as a transaction method. These transactions are high risk for fraud and may not be protected from disputes.
• Obtain authorization for all transactions on the date of the transaction date, and settle the transactions within the authorization validity period.
• You should not process transactions for which “Declined” authorization responses are received. Ask for another means of payment.
• Ensure that all merchandise shipped is delivered to the correct address or picked up and signed for by the actual cardholder. Have the cardholder confirm delivery by signing the shipping invoice.
• Ensure that all merchandise shipped is suitable for the purpose for which it was sold and delivered in a satisfactory condition.
• Ensure that your return, refund, and cancellation policies are clearly outlined at the time of the transaction and on your eCommerce website. Clear disclosure of these policies can help you avoid misunderstandings and potential cardholder disputes.
• For recurring transactions that are billed periodically (monthly, quarterly or annually), if the cardholder requests cancellation you should cancel the transaction as specified by the customer and in accordance with your agreement with the customer.
• Avoid processing a single transaction more than once; reconcile your daily deposits to ensure the transactions are processed correctly. Should you discover a duplicated transaction, Moneris recommends that you immediately process a refund to the cardholder’s account and promptly advise the cardholder about the refund to avoid a chargeback.
• Ensure that all electronic deposits (sales and refunds) are settled via your POS terminal within three (3) business days from the date of the transaction.
• Ensure that all refunds are entered as a credit/refund and not as a sale via a POS terminal.
• If merchandise is to be shipped, an authorization for Mail Order/Phone Order or eCommerce transaction can be obtained up to seven (7) calendar days of the transaction date. For such a transaction, the transaction date is the date the merchandise is shipped.
• Card not present transactions include online transactions, telephone orders and mail orders, all of which are at a high risk of fraud. Consider implementing an authentication solution designed to make ecommerce transactions more secure in real-time. At Moneris we have a number of fraudulent prevention tools, such as 3Ds and Kount, which are designed to make eCommerce transactions more secure in real-time. We encourage you to speak to a Moneris Sales Representative today to explore the best solution that fits your needs as it pertains to fraud prevention. 
• To help avoid a potential non-reversible chargeback to your account, please respond to the copy request or chargeback by the response due date provided on Merchant Direct. 
• Respond to all retrieval requests, even if they appear to be duplicates.
• Ensure your website display the following information on your eCommerce website: 
  • Prominently display your business name. 
  • Complete description of the goods or services offered.
  • Company Information and customer service contact information, which includes an email address and telephone number.
  • A detailed return and refund policy that informs cardholders of their return or refund options before they purchase a product or service.
  • A “Click to accept” or alternative affirmative action by the cardholder when completing an online order as well as a click.