Okie, i have merchant account for almost 7+ months now, no chargebacks yet since I personally call and confirm every order we recieve.


Technical Info: authorize.net gateway/CDGCommerce

Last month, on March 14th 2005, we recieved an order of some 40 USD. As usual, we called up the person for 2 days but got no response, so we marked the order as fraud, and processed the REFUND on March 17th 2005. All done within 72 hours.

Now, on April 16th 2005, we recieve an email from CDGCommerce that there is a chargeback on our account, created on April 16th 2005.

I have put the dispute on chargeback since we had refunded the amount long ago within 72 hours of payment date/time.

But what has pissed me off is, CDGCommerce has withdraw $30.00 from my account already in advance without even looking at the matter, which is sham.

Second thing i would like bring up is, when we refund someone on paypal, paypal returns the 2.9% merchant fees also, but CDGCommerce not only don't return the 2.xx% they charge, but they also add 30-40 cents + 2.xx% from us.

i.e. client pays: $100, CDG takes say 2% ($2.00), we get $98.00 in our account. We refund the transaction: CDG takes $100 from our account + some small fees of few cents also. So, is this fair??

Other than this, i have no other complaints, and enjoying the services at CDG though they should improve their phone support which puts on hold every other second as if there is only one person handling 10 calls at a time.

I could be mistaken but I believe there is a retrieval fee for each charge back(regardless if you are at fault or not), contact CDG support I am sure they would be happy to help :)

But there should be NO CHARGEBACK at first place so retrieval fees or no retrievals, it does'not matter in this case, dont you think?

Regardless of the fact there there should or shouldn't be a charge back, the cardholder initiated one through their bank which then goes through VISA etc, CDG has little say in this matter; and if I am not mistaken the chargeback retrieval fee is not collected by CDG but by the bank or something along those lines...

Chargebacks are one of those things that make you want to bang your head into the wall, but you have to take the good with the bad when it comes to e-commerce.

Get in contact with CDG(Kathy, Chris, anyone :) ) and I am sure they can explain this much better than I most others here could. Shoot a email over if you haven't already, I bet the email gets checked on the weekends.

Given the circumstances, your best bet is to indeed use your Chargeback Defender system to perform a rebuttal since a credit was issued against that sale by you quite some time ago.

This should result in a reversal of the chargeback and the return of the sales funds into your account. Our staff can definitely help you further with this if you have any questions at all.

In addition, our exceptions processing system will normally check if a refund was issued against a sale and auto-rebuttal an incoming chargeback but occasionally if both events happen at nearly the same time, the refund will clear after the chargeback. (normally the refund would clear first)

The only time the above does not apply is if the refund is credited back to a different credit card # or paid via a check or another payment method. However, a reversal can still typically be performed even in those circumstances with properly prepared documentation.

I am not sure what the specific details are with your account but I will also take a look at it later this weekend once I get back in town from a trip that I'm on currently. However, I think it is safe to say that you are in a good position to have that chargeback reversed. So that's a good thing. :)

Also - most companies do charge those transaction rates & discount rates on both transactions. Visa charges the acquiring bank, the acquiring bank charges the ISO, and the ISO charges the merchant. Vicious cycle - but someone does have to pay unfortunately.

We've run into a huge problem with a merchant we have in similar situation but to a larger extent.
A customer of our merchant paid 40 000 USD through credit card for a tour. In 3 weeks, the customer changed his mind about payment way and paid through with a wire transfer and the merchant requested a refund. We have refunded the transaction but refused to refund the transaction fee.

As you may guess there was (and still is) quite a huge dispute.
While it is true, that quite a few acquiring banks (or PSPs or processors) won't charge a transaction fee (and discount fee) for the refunded transaction, this usually happens believe it or not because of outdated contracts they have with their merchants or simple lack of knowledge because VISA/MC/AMEX will charge them this fee.

The reason is that UNLIKE REVERSAL OF PRE-AUTH, a credit (or a refund) is a SECOND financial transaction. And because of that it gets charged the same fees. Whether the fund reached the merchant or not, they have gone through the system so to say, and the service has happened so it is a subject of fee which all parties starting from VISA and MC and AmEx will charge. Some banks just don't notice this and it causes problems for everyone else.

Hello,

I have asked one question to CHRIS @ CDG, but it is 2 days and no reply yet!!

I want to know if not CDG, to whom is going my $30.00 Chargeback fees, So I can take the matter with that party directly, be it UBC Bank or the VISA/Master or the bank of the customer.

B'cos otherwise it is a simple way of leaching money by CDG and passing it as processing fees which is not in CDG's control as mentioned in email.

I WANT TO KNOW WHO IS GETTING THE SO CALLED PROCESSING FEES FOR A CHARGEBACK WHICH SHOULDN'T BE THERE AT FIRST PLACE.

By the way, this also doesn't give the so called hype of Chargeback Defender system, as this case is turning to prove it as just farce b'cos even the amount was refunded in less than 48 hours of transaction, CDG clients are still charged the $30.00 fees. It is no deferent from any other chargeback mechanism process by any other merchant.

very disappointed @ CDG over this incident.

HenryJ,

I understand that you are frustrated about the chargeback that you received but I feel the need to clarify on a couple of points that you brought up.

First, our Chargeback Defender system is actually very different from the industry norm in that it (a) provides an early warning in advance of the debit and (b) it provides a streamlined online rebuttal process which has been very successful for many of our merchants in reversing the sales funds that were debited.

Every day I see representments for our merchants successfully processed which means that our merchants get back their sales funds. So I think that there is a clear and tangible value there, and I feel that it is actually very different from most other programs in that regard.

However, it is important to keep in mind that, as with every merchant processor, when a chargeback comes through there is a service fee cost associated with that - regardless of the outcome... whether it is resolved in favor of the cardholder or the merchant.

It is also worth noting that with many other merchant processing scenarios, there is no truly streamlined means at all by which a merchant can even respond in a streamlined matter in the hopes of getting their sales funds returned.

In your particular case, our system automatically detected that the chargeback which came through had a refund associated with it and it auto-reversed the chargeback and never even debited your account in the first place for the sales amount itself.

Thus, the only cost you incurred was the chargeback service fee and that is because we, too, incur a hard cost on every chargeback from our settlement network and have to pass on that cost.

So to clarify... this is not a matter of policy with respect to CDGcommerce but part of the core mechanism that exists with all Visa/MasterCard merchant processing & exception handling.

The difference in our case is that we provide several extra layers of protection for our merchants as demonstrated by the auto-reversal that took place on your account without any intervention needed by you.

In terms of the chargeback fee - I definitely wish that in the event of a successful rebuttal/representment, that the chargeback service fee itself would be refunded back to us so that we could pass it back to our merchants, but that is just not the reality of the situation.

We have invested a lot of time, money & effort into build systems that help out our merchants and as you know, we do not charge even a penny extra for any of these services strictly to benefit our merchants and Chargeback Defender is one such example.

If I can be of any further assistance to you, please let me know and I'll be happy to assist in any way possible.

Anyway you look at it, it's WRONG. If there was a refund associated with the original transaction, then the chargeback was fraudulant.

This is probably something companies like CDG need to take up with the aquiring banks since you guys are big enough to have some leverage.

Is there a way for merchants to somehow pass this to the customer, kind of like a returned check fee?

I absolutely agree with the comment that improvements should be made on the Visa/MasterCard system as a whole with respect to these kinds of situations.

The issue is really even above the acquiring bank level but rather one that is pertinent to the Visa and MasterCard Card Associations themselves.

Those are the organizations that market & operate the Visa and MasterCard brands through their 25,000+ member banks and which are responsible for the operating rules & regs as well as the rules with respect to chargeback & exception processing.

One would also hope that as more competition enters the card issuing marketplace, there will be some additional changes taking place with Visa and MasterCard - all depending on how merchant-friendly these new competitors are.

However, this is not always the case.

For instance, while American Express is now making major inroads on the card issuing side of the business... they have an even more merchant unfriendly policy with respect to their handling of Internet-originated chargebacks. So that is not much of a help for any of us on the processing or merchant level.

In fact, it has been a detriment since Amex is now making huge waves by recruiting Visa/MasterCard banks under the auspices of higher profits by charging merchants more.

And in turn, in order to try to keep their member banks loyal, Visa and MasterCard continually increase their Interchange rates since the Interchange profits go directly to the card issuing banks.

I can only imagine that this is also going to result in Visa and MasterCard being a lot more concerned about lost marketshare and maintaining their position in the market as opposed to loosening up on chargeback policies which could ultimately frustrate cardholders and in doing so, make them more willing to switch to competing brands like Amex, Discover, etc.

Thus, in essence, the WALMART settlement and Amex's new resurgence in the marketplace is causing price inflation for all processors and merchants nationwide... and probably an even greater reluctance to do anything at all to disrupt existing cardholders' perception of the "security" and "protection" offered by using a Visa or MasterCard for their purchases.

In terms of your question on way merchants can somehow pass on that cost to the customer, you could do so in the event that you took a customer to collections over a sale that they charged back. So the answer is "yes" from that standpoint.

However, the rules & regs prohibit you from putting any specific mention in your TOS about assessing the cost of a chargeback in the event of a refund.