This guide helps you understand the Chargeback process and what actions you need to take when a customer disputes a Payment. It explains what happens at each stage, how to respond, and what to expect from Card Schemes and Team Teya.
Stages of a Chargeback
A typical chargeback process goes like this:
Stage 1: Initiation
The Chargeback amount is deducted from your Account. You can accept the Chargeback or submit evidence to dispute the chargeback. If you accept it or miss the deadline, the case ends here and the chargeback is lost. The money is returned to the cardholder.
Stage 2: Disputed
Teya submits your evidence to the relevant Card Scheme. The case is now disputed and awaits the customer's review. If the customer accepts your dispute or the timeframe expires, the case ends. The Chargeback will not be deducted from your Account.
Stage 3: Pre-arbitration
If the customer rejects your dispute, they initiate Pre-arbitration. You can choose to accept the Chargeback or keep disputing it. You can only continue disputing if you met all Card Scheme requirements in the previous stage. If you have not done so, then you will not be able to take the case further, and the chargeback to the cardholder will be accepted.
Proceeding past this stage involves additional fees of 500 EUR, usually charged to the losing party.
After this, the cardholder is given one more change to keep disputing the chargeback after this decision has been made.
Stage 4: Arbitration
Arbitration is the final stage and is handled directly by the Card Scheme. This stage involves additional fees charged to the party that loses the case. Arbitration carries cost and risk, so it is not always recommended. If you lose, the Chargeback is deducted from your Account along with the Arbitration fees.
What happens when I receive a Chargeback?
When a customer initiates a Chargeback, Teya notifies you by email. This email includes an explanation of the dispute and outlines the evidence you need to provide to defend your case (if applicable).
At this stage, Teya deducts the Chargeback amount and a dispute fee from your Settlements.
Teya will facilitate and advise on your case with the evidence that you provide, but we do not control the outcome of chargebacks, those are at the discretion of the card schemes.
How do I respond to a Chargeback?
Respond to the notification email with your defence documents to challenge the dispute.
Before you start: Ensure all evidence meets the following requirements:
- Saved in JPEG or PDF format.
- Written in English.
- Attached directly to the email, not sent as a web link.
Important: If you miss the deadline or choose not to submit documents, the Chargeback is accepted and closed. The Card Scheme returns the money to the customer.
Why is my Chargeback amount different from the original Payment?
Teya deducts the transaction amount from your Account on behalf of the Card Schemes. The deducted amount might differ from the original Payment amount for a few reasons.
Common reasons for different amounts:
- Currency conversion: If the Payment requires currency conversion, the exchange rate at the time of purchase will likely differ from the rate at the time of the Chargeback.
- Partially refunded charges: You might have offered a partial refund, but the customer disputed the entire Payment.
- Partial Chargebacks: The customer disputes only a portion of the entire transaction amount.
Example of currency conversion:
A customer pays 20,000 ISK on your Card Machine. At the time of the Payment, the exchange rate is such that the customer sees around 120 GBP on their statement. The merchant sees 20,000 ISK on their settlement report.
A few days later, the customer raises a Chargeback for this transaction of 120 GBP. By then, the exchange rate has changed (120 GBP = 20,870 ISK). Hence, the merchant receives a chargeback amount for 20,870 ISK now.
In this case, the original Payment and the Chargeback are for the same amount in the card currency (GBP), but the amount shown in ISK for the merchant is different because the exchange rate changed between the two dates.
Important
Do not refund the customer outside of the Chargeback process. Doing so might result in you refunding the customer twice. Reach out to Team Teya if you accidentally issue a refund after receiving a Chargeback.