Do you know the difference between a cancellation, a refund and a chargeback? It is simple. All three terms mean the same action – returning money to the customer. The only difference is in how the amount is returned.
Refunding a payment, i.e. a cancellation
A refund is the return of a payment in response to a standard cancellation request that you as the merchant submit from the business account environment or via the API. A refund can also be carried out by GoPay, provided that you as the merchant agree.
If the payment cannot be refunded for you, please contact us at [email protected].
Chargeback
If the customer paid for the order by payment card, they can raise a chargeback with their bank. It is a form of dispute guaranteed by the Visa and Mastercard card schemes that serves to protect the buyer. Chargebacks are assessed under the rules of the card schemes and of the customer's bank.
The most common reasons for a chargeback are:
the order was not delivered,
the goods/service are damaged or do not match the description,
the customer does not recognise the transaction,
the order was cancelled and the customer expects the payment to be returned,
and others.
Example: the customer pays for goods by card, but the goods are delivered damaged or incomplete, or they do not receive them at all. In such a case the customer is entitled to turn to their bank and raise a chargeback.
A chargeback is therefore a dispute raised by the cardholder with their bank. It can be created directly at the bank or through mobile banking. This dispute is not raised by GoPay or by the merchant – it is always raised by the cardholder.
The card companies have their own rules for raising and resolving chargebacks, and it can happen that a customer raises one without justification. In the case of an unjustified chargeback you can defend yourself and dispute it.
How does a chargeback work?
The customer raises a dispute with their bank.
The bank starts the dispute process and informs our disputes department that a chargeback has arisen.
As soon as we receive the information, we send a chargeback notification to the merchant to whom the payment was credited.
If the chargeback is justified, you can give your consent to returning the payment to the customer. On the basis of the merchant's consent we return the payment using the original payment method. A fee is charged for the chargeback according to the applicable Fee Schedule. At this point the whole chargeback process ends.
Of course, you may also disagree with the chargeback. If you disagree, you must send a statement accompanied by documentation that disputes the chargeback.
Without the merchant's cooperation it is not possible to determine whether the chargeback is justified or not. Disputing it requires active cooperation in the form of a detailed statement and supporting documentation that refutes the customer's claim. It is important to respond to a chargeback in time – the deadlines for sending documentation are very short. If the deadline is not met, the chargeback is automatically closed in the customer's favour.
The documentation is always assessed by the customer's bank, which follows the rules of the Visa and Mastercard card schemes. It has more than a month to handle each case.
Outcome:
If the documentation is not convincing enough, the bank closes the chargeback in the customer's favour and returns the payment to them (the payment is deducted from the merchant's business account). A fee is charged for the chargeback according to the applicable Fee Schedule.
If the documentation and the statement are convincing enough, the chargeback is closed and neither the payment nor the fee is deducted.
You can read more in the article Fraudulent transactions and chargebacks.