FAQ: Risk Prevention
List of questions
- What is a chargeback?
- How can PayLane help me to prevent chargebacks?
- What should I do when a chargeback appears?
- If I object a chargeback, how long will I have to wait for the final decision?
- Do you help me with the chargeback objections or will I have to do it by myself?
- I offer non-physical goods/services to my customers (e.g. downloads, e-books, membership sites, etc.). Can I object a chargeback?
- I sell low price goods. Can I object a chargeback?
- Would that be a problem if I receive numerous chargebacks?
- If I happen to have a minor transaction number and a few chargebacks occur, my chargeback ratio will be very high. Will there be any penalties imposed by Credit Card Organizations?
- Is 3D Secure mandatory with Paylane?
Q1: What is a chargeback?
A chargeback is a transaction dispute initiated by the cardholder bank (the card issuer).
In case of a chargeback, two charges are deducted from your merchant account:
- The transaction amount – being returned back to the cardholder
- The chargeback fee imposed by the credit card organizations – PayLane strives to keep it as low as possible (see more: pricing details).
There are various chargeback reasons, such as:
- Fraud
- Transaction not recognized
- Order not being fulfilled (service not rendered, product not delivered)
- Customer unhappy with the order/product
On a chargeback you will receive its reason’s code to determine the reason why it was made. Please note that you can raise an objection to it within 14 days after it has appeared in your merchant account. PayLane informs you about all incoming chargebacks instantly, with no delay.
Q2: How can PayLane help me to prevent chargebacks?
At PayLane, we know that top notch security is all merchants’ core objective. Therefore, we give you a highly-sophisticated Anti-Fraud System, free of charge, as an inherent part of our service. We strive to help you keep the chargeback risk on the minimum level, however it is impossible to entirely eliminate it.
One of the most common chargeback reasons is a credit card fraud. Fraudsters use stolen credit card data to order goods and/or services while the cardholders are not aware of the fact. To prevent such situations, PayLane implemented a dedicated Anti-Fraud System that effectively helps to minimize the risk of a credit card fraud.
Another reason may be a cardholder’s dispute of a transaction, e.g. when the cardholder cannot recognize the merchant company on their transaction statement.
To ensure all PayLane customers are aware of the issue, we advise our merchants on how to organize all the operations such as: the purchase process, the delivery process, return policy and more, in order to prevent chargebacks and minimize the risk.
If you need help with chargeback prevention, please contact PayLane Support.
Q3: What should I do when a chargeback appears?
First of all, you need to check the chargeback’s details. When you receive a chargeback, PayLane sends you an e-mail notification (unless you turn that option off). To view the list of all new chargebacks along with their description/reason, you need to log into the Merchant Account and check the "New chargebacks" section, available on the home page.
You can either accept the chargeback, simply by taking no action, or object it by contacting PayLane Support and advising why it should be cancelled. However, please make sure that the objection can be raised. The credit card organizations have specific rules and regulations that do not allow, in certain situations, to object the chargeback.
You will not be able to object the chargeback in the following situations:
- The goods/services ordered by the cardholder are not physical – all electronic goods and services fall into this category. If you sell an e-book you will not be able to object any chargebacks.
- There is no written proof of the goods/services delivery. You always need to obtain a written delivery proof from the cardholder. If you send physical goods, it will be the confirmation from the courier company, as they always require signatures of the recipient.
- The transaction value is lower than EUR 50 or USD 60 (or an equivalent of EUR 50 in any other currency). In this case only the chargeback fee shall be deducted from your merchant account and the transaction amount will be covered by PayLane.
Please note that no matter what the reason of a chargeback is, a merchant shall be charged for every incoming chargeback, even if the transaction has been refunded or the chargeback can be objected. On a successful chargeback objection, you shall retrieve the transaction amount, however the chargeback fee is non-refundable, regardless the circumstances.
The exact amount of a chargeback fee is stated in a merchant contract.
There is also an additional risk factor that you should be aware of. When you exceed a certain chargeback rate, that is chargebacks to sales ratio, in a given month you might be subjected to additional fees imposed on you by the Credit Card Organizations.
On such situation, you may be included in the VISA and/or MasterCard special programs: Visa Global Merchant Chargeback Monitoring Program (GMCMP) and/or MasterCard Excessive Chargeback Program (ECP).
If you wish to learn more about these programs please contact PayLane Support.
Q4: If I object a chargeback, how long will I have to wait for the final decision?
In accordance with the Credit Card Organizations’ rules and regulations, the chargeback objection procedure has to be completed within 14 calendar days.
Q5: Do you help me with the chargeback objections or will I have to do it by myself?
We will help you with objecting chargebacks. If you require such assistance, please contact us.
Q6: I offer non-physical goods/services to my customers (e.g. downloads, e-books, membership sites, etc.). Can I object a chargeback?
It is not possible to object chargebacks for transactions where no physical goods or services have been rendered. This is due to the Visa/MasterCard regulations.
Q7: I sell low price goods. Can I object a chargeback?
It depends on your products’ prices and the acquirer that runs your merchants account.
Some acquirers have insurance for low value sales and they will not allow you
to make an objection. Instead they will not debit your for the chargeback. You would
still have to pay the chargeback fee though.
Q8: Would that be a problem if I receive numerous chargebacks?
When you exceed a certain chargeback rate, that is the chargebacks to sales ratio, in a given month you might be subjected to additional fees imposed on you in accordance with the Credit Card Organizations’ rules.
On such situation, you may be included in the VISA and/or MasterCard special programs: Visa Global Merchant Chargeback Monitoring Program (GMCMP) and/or MasterCard Excessive Chargeback Program (ECP).
If you wish to learn more about these programs please contact PayLane Support.
Q9: If I happen to have a minor transaction number and a few chargebacks occur, my chargeback ratio will be very high. Will there be any penalties imposed by Credit Card Organizations?
It is true that ratio will go up, but in real terms, for smaller merchants it is not as easy to qualify for any chargeback program since a certain limit (number of transactions) is not reached.
Please note that in case of any chargeback we first contact the merchant and ask for clarification.
If you need any help with chargebacks, we may suggest you preventive measures applicable for your business model.
Q10: Is 3D Secure mandatory with Paylane?
As a rule, this is up to you whether you wish to be additionally protected by the additional transaction authorization or not.
However, it is an obligation if you decide to accept Maestro cards.
