Introduction

What are chargebacks?

A chargeback is a term used to describe a customers request to reverse a payment by disrupting the charge on their account statement. Chargebacks were introduced to offer customers an easy way to dispute suspicious transactions and to protect them against financial fraud. A chargeback need not always be due to fraudulent activities but can also be due to simple processing errors such as charging the customer twice or sending a damaged product. A customer can file a chargeback with their bank. Once approved, the customer receives the amount back. But merchant have the option of disagreeing with the chargeback and claiming it back. 

Chargebacks and refunds both involve the return of funds but a major differentiating factor between the two is that for refunds the customer directly gets in touch with the merchant while for a chargeback they contact their bank. The process also tends to be longer for chargebacks and the fees are often significantly higher. 

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How are chargebacks bad for business?

Chargebacks often come with additional fees which are to be paid by the merchant. Banks and card providers also tend to penalise the merchant if the chargeback ratio becomes too high. 

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How does a chargeback occur?

When customers place an order through your checkout page, they receive an Order Confirmation email. Additionally, they receive a Payment Confirmation email when the initial payment is successfully charged, as well as subsequent Payment Confirmation emails for recurring payments.

In some cases, a customer may dispute a payment, claiming they did not authorize it, and request a chargeback. To initiate this, the customer can click the Payment Service Provider (PSP) link included in the Payment Confirmation email. The PSP processes the chargeback request, and once approved, the customer is refunded the payment.

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Feature Overview

When a chargeback occurs, circuly automatically updates the order and payment status in your system to reflect the chargeback. Here’s how the feature works in detail:

• In your circuly operations backend, the payment status of the order changes to “chargeback”. 
• The order is automatically canceled, and the cancellation reason is set to “chargeback.”
• The asset revenue is updated with the chargeback amount. 
• If the customer has not received the asset then the subscription status is updated to “cancelled by customer”.
• If the customer has received the asset then the subscription status is changed to "cancelled by customer" and the customer receives the Order Cancellation email. Additionally the subscription status is changed to pending return and the customer receives the return instruction email. 

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- How to identify orders with chargeback in circuly

Chargebacks can be identified in both the Payments and Subscriptions tabs within the circuly Hub. Here's how to view chargebacks in each section:

• Payments Tab
• Subscriptions Tab

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Chargebacks in the Payments tab

To see the chargeback > Go to the Payments Tab > You’ll see a list of all the payments > Use the filter function to only display payments with the chargeback status. 

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Chargebacks in the Subscriptions tab

Go to the Subscriptions tab and select a subscription from the Subscription List > In the Subscription Overview Window scroll down to Payments and Recurring Payments. 

• When recurring payments are charged back, you can see it in the Recurring Payments section. The status of the payment is displayed as “failed” and the reason for the failed payment is marked as chargeback payment under the Failed Reasons column. (See image)

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• When a non recurring payment is charged back, you can see it in the Payments section. The status of the payment is marked as chargeback. (See image)

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- How to deal with chargebacks

Follow up with your customer manually to find out why they have initiated a chargeback. Depending on the outcome of the call you can either agree to the chargeback or charge the customer a one-time payment if the chargeback was mistakenly reported.

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