What Is Chargeback, and How Does It Work?

Let us talk about how the refund mechanism for a product or service works. What can an entrepreneur do so as not to lose money in the case of consumer fraud? How can VMPI help when you open an account that is protected? The basics of chargebacks and VMPI are presented here.

What Are Chargeback and VMPI?

Chargeback is a mechanism in which the payment system cancels the transaction on the customer’s bank card and returns the money in USD, EUR, or other currency from the seller’s online account and eWallet.

One can return money using a chargeback only for a product or service that was paid using acquiring. At the same time, the customer needs a serious reason to return the funds, for example, in the case of not receiving the paid goods or if the money was debited from the card twice by mistake. One can also request a chargeback if the bank card details were stolen and used by fraudsters to make purchases.

However, there are fraudulent chargebacks in Europe, and a businessman, in this case, needs protection like VMPI. For more details, visit https://maxpay.com/.

How does it work?

The refund mechanism is quite simple:

• The customer submits an application for a chargeback to the bank that issued the bank card used for the transaction.
• Next, the bank investigates and decides if there are grounds for a refund. In case of a positive decision, it transfers the information to the payment system through which the transaction passed, for example, Maxpay, and the latter, in turn, sends it to the seller’s bank.
• If the acquirer agrees with the customer’s arguments, the money is returned to their online account. However, the bank can also take the side of the seller, and then the transfer will remain in force.

What Does an Entrepreneur Lose with a Chargeback?

If the acquiring bank decides to return the money to the customer, the entrepreneur loses not only the payment but also the acquiring commission, which the bank withholds until the initial payment is transferred to the store’s online account. When returning funds, the bank deducts the full purchase price from the seller’s account but does not return the commission to the eWallet.

It is worth noting that payment systems impose fines on banks serving stores with a high frequency of chargebacks. This is done as part of the anti-fraud initiative. Banks, in turn, may demand compensation for losses from entrepreneurs. In rare cases, the seller may lose acquiring, although this happens only with systematic violations on their part.

Furthermore, when you open an account in Maxpay, you can be guaranteed protection from fraudulent chargebacks. For example, VMPI is introduced for this purpose. It was created by Visa to inform merchants first about the chargeback and prevent fraud.

If VMPI is introduced, you will be instantly informed about the chargeback and can solve the issue via VMPI without issuing bank. Therefore, learn more about VMPI and try to use it.

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