Chargebacks are a forced transaction reversal initiated by the cardholder’s bank. They are meant as a consumer protection mechanism.
A chargeback provides a card issuer a way to return funds from a disputed transaction. When a cardholder disputes a transaction, the card issuer may request a written explanation of the problem from the cardholder and can also request a copy of the related sales transaction receipt from Buildium, if needed. Once the card issuer receives this documentation, the first step is to determine whether a chargeback situation exists.
When a chargeback right applies, the card issuer sends the transaction back to Buildium and charges back the dollar amount of the disputed sale. Buildium then researches the transaction. If the chargeback is valid, Buildium deducts the amount of the chargeback from the merchant account and informs the merchant.
Example Chargeback Process
1) Card holder disputes transaction
2) Card issuer asks the cardholder for an explanation of the problem and sends the transaction back via VisaNet/MasterCom to Buildium - When a card issuer sends a copy request to Buildium, we have 30 days from the date it is received to send a copy of the transaction receipt back to the card issuer.
3) Buildium receives the chargeback and has the option of resolving the issue or forwarding it to the merchant.
4) Merchant either accepts the chargeback item or addresses the chargeback issue and disputes the chargeback.
5) Buildium reviews the information received from the merchant. If we agree that merchant info addresses the chargeback, we represent the chargeback via VisaNet/MasterCom
6) Upon receipt of the representment the card issuer reviews the information to determine financial liability.
7) Upon recipient of the representment card issuers may accept the representment and re-post the transaction to the cardholders account.