Authorization Representment

The merchant account is represented by the acquiring processing bank during certain credit card processing disputes. At times, a chargeback dispute may be settled behind-the-scenes in what is called an “Authorization Representment.” Here is information on how a chargeback dispute can be automatically resolved.

Many Reasons for Chargeback

A chargeback is a financial transaction that was approved, but later the funds were either not available or the customer changed his mind. Sometimes, no one is really at fault when a chargeback occurs. Much of the chargeback process might be determined behind-the-scenes without direct merchant involvement.

If fraud was involved, then the banks will investigate. The fraud could be at the consumer, merchant or bank level. The credit card banks will notify the merchant of their findings.

When a customer changes his mind on a purchase, he contacts the credit card company. The credit card issuer will investigate and determine whether a chargeback should occur based on its own policies.

Chargeback Process Controlled By Banks

The merchant account has control over the initial presentation of the credit card for the transaction. If the merchant mistypes, intentionally alters or misuses customer financial information, then he could be liable. Customer dissatisfaction with the delivery of goods or services could also lead to chargebacks. The credit card companies will check their records to try to find out where the error or fraud occurred during credit card processing.

On his monthly statement, the merchant will be given a list of his chargebacks. At that point, he can dispute the chargebacks by contacting his acquiring bank within the specified period of time. Merchants are rated based on the number and types of chargebacks they occur; a merchant account might be cancelled if there are too many chargebacks.

Authorization Representment

At times, the chargeback issue was not a problem of the merchant himself. When the merchant’s processing bank resolves a chargeback in the interests of the merchant, it is called an “Authorization Representment.” This could be automatic – without direct merchant involvement.

An acquirer bank has a vested interest in ensuring that the merchant does not have too many chargebacks. The acquirer shares risk and might be fined for too many merchant chargebacks. During credit card processing, the customer has the credit card issuer bank in his corner while the merchant has the acquirer processing bank in his corner.



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