How does the banks' chargeback process work?
The banks' chargeback process involves several steps and follows a specific set of guidelines, documentation requirements, deadlines, and chargeback codes. Let's break down the process into distinct stages:
- Step 1: The customer initiates a chargeback dispute request over a transaction. This can happen when the customer believes there has been an unauthorized transaction, fraud, or dissatisfaction with the product or service.
- Step 2: The issuing bank, which is the customer's bank, reviews the chargeback dispute and electronically sends the transaction details to the acquiring bank. The acquiring bank is the bank that processes payments on behalf of the merchant.
- Step 3: The acquiring bank (in this case, Sabadell) receives the chargeback request and performs an initial review. Depending on the circumstances, the acquiring bank may automatically resolve the issue or forward the dispute to the merchant.
- Step 4: The merchant, upon receiving the chargeback request, has the option to accept or reject it. If the merchant rejects the chargeback, they can provide evidence to support their case. This evidence may include proof of delivery, customer communication, or any other relevant information.
- Step 5: The acquiring bank reviews the evidence provided by the merchant to ensure it meets all the requirements. If the evidence is satisfactory, the acquiring bank sends it to the issuing bank for further review.
- Step 6: The issuing bank evaluates the evidence presented by the merchant and decides on the chargeback request. They consider the validity of the customer's claim and the evidence provided by the merchant.
- Step 7: Both the cardholder (customer) and the merchant are notified of the decision made by the issuing bank. If either party disagrees with the decision, they can initiate arbitration to seek a resolution.
During the investigation, which may take up to 50 days, the bank gathers information and ultimately resolves the chargeback in favour of either the cardholder or the merchant. If the chargeback is resolved in the merchant's favour, the refunded amount, including the chargeback fees, is returned to the merchant.
NOTE: While the process described above provides a simplified overview of the chargeback process, it is important to understand that each case may have unique variables and circumstances. Acquiring banks adhere to specific guidelines and regulations when handling chargebacks.