The role of payment gateways in cases of chargeback for merchants
Payment gateways play an important role in the chargeback process. A payment gateway is a service that acts as an intermediary between a merchant and a customer’s issuing bank. It is responsible for securely transmitting transaction data between the merchant and the bank, as well as for authenticating the customer and processing the payment.
In the case of a chargeback, the payment gateway is responsible for communicating the chargeback request from the customer’s issuing bank to the merchant. It may also provide the merchant with the necessary tools and information to respond to the chargeback, such as the reason code and the transaction details.
Payment gateways support chargebacks
Payment gateways can help merchants win disputes or chargebacks by providing tools and processes that make it easier for merchants to gather and present evidence to support their cases. This can include things like transaction logs, IP address information, and customer account information.
For example, a payment gateway may provide a merchant with a detailed transaction log that includes information about the customer’s IP address, the items or services that were purchased, and the shipping or billing information that was provided. This information can be used to show that the transaction was legitimate and that the customer received the items or services that they purchased.
Another way that a payment gateway can help merchants win disputes or chargebacks is by providing fraud detection and prevention tools. For example, a payment gateway may use machine learning algorithms to analyze transaction data and flag suspicious activity. This can help merchants identify and prevent fraudulent transactions before they occur, reducing the risk of disputes or chargebacks.
Additionally, some payment gateways provide dispute management services to help merchants navigate the chargeback process and provide evidence for disputes. They may also work with acquirer banks and card issuers to improve the merchant’s merchant account status.
It’s worth noting that some gateways also provide merchant-facing documentation that can help merchants understand their rights and responsibilities in the event of a dispute or chargeback, and how to best present their evidence to increase their chances of winning the dispute.
Choosing the right payment partner
When choosing a payment gateway partner, asking about their support in cases of disputes and chargebacks is critical. It is important to consider the following factors :
- Chargeback Management:
Look for payment gateway partners that provide helpful and complete documentation of chargeback reason codes and dispute management processes.
Choose a payment gateway that complies with industry security standards such as PCI-DSS, and has a strong track record of protecting sensitive customer data. It is recommended to only work with gateways processing 3D secure transactions only.
Make sure the payment gateway provider offers good customer support and is responsive to queries and issues that arise. This is especially important in disputes where quick response is important
- Chargeback Fees:
Disputes cost all parties fees, which is why it should be avoided. Make sure the payment provider does not have excessive fees for chargebacks, it usually should not exceed $50 or the equivalent per case.
It’s recommended to do a thorough research and compare different payment gateway providers, and also take into account any additional needs that merchants may have, and based on that choose the most suitable partner.
It is also very important for merchants to make a clear distinction between regulated payment gateways and marketplaces or other third party providers accepting payment on merchant’s behalf. The latter would make merchants much more vulnerable to losing a dispute case as they are not the merchant on record and are under the mercy of the marketplace terms and conditions instead.
Paymennt.com is PCI compliant and has a dedicated compliance department that works with merchants if a dispute is filed in order to contest the case and help the merchant. All transactions on paymennt.com are 3D secure as well which adds an additional layer of protection from fraudulent or unauthorized card transactions on the paymennt network.
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