A guide to chargebacks - Part II of III
Posted on Tuesday, September 25, 2007 by Bryan Johnson
II. First Reversal Phase:
If the merchant does indeed respond with a “Merchant Letter” back to the Acquirer, a “Reversal Phase” of the dispute is opened and a Chargebacks Analyst will review the Merchant Letter and will see if the merchant’s response and the overall dispute qualify to be “Reversed” back to the Issuing Bank. At this point, one of two scenarios will occur:- If the Chargebacks Analyst deems the Merchant’s response as invalid, they will close out this phase as “Request Denied” and will mail a letter to the Merchant explaining why the Chargeback cannot be reversed back to the Issuing Bank at that time.
- If the Chargeback Analyst deems the Merchant’s response as valid, the Acquirer “Reverses” the Chargeback back through the Association and eventually back to the Issuing Bank along with a debit for the disputed amount. The Acquirer is then credited for the amount in dispute and in turn credits the Merchant’s business checking account. The Chargeback fee remains on the Merchant’s account as this is a fee charged by the Associations as a cost for processing the Chargeback. This “First Reversal” phase of the dispute is then considered “Resolved To the Issuing Bank” and will remain closed unless the Issuing Bank initiates a “Pre-Arbitration” notification (Visa) or a Second Chargeback (MasterCard).
