How Does a Standard Chargeback Happen?

Chargebacks are the result of unresolved disputes from dissatisfied customers. They can also be the byproduct of fraud against a business.

Chargebacks are similar to refunds. A client can request their money back when they have an unsatisfactory experience. Unlike refunds, however, chargebacks involve credit card providers.

A chargeback requires the card issuer to return funds to a customer. A high chargeback to transaction ratio makes a business “high risk” and can even shut it down. This is why merchants keep an eye on their chargeback rates.

What is a Partial Chargeback?

A partial chargeback occurs when the full amount of a dispute is not returned. This can happen when a client has an issue with an item in a purchase of multiple items.

Partial chargebacks are more likely to occur in processing or authorization errors and customer disputes. Fraud is a common driver of chargebacks, but these cases dispute the full amount rather than a portion.

Merchants are able to decipher why their full or partial chargebacks occurred in a chargeback report. Credit card providers identify causes with codes.

How Do Partial Chargebacks Affect Merchants?

A partial chargeback impacts merchants in the same way as full chargebacks. The only difference is the portion of the transaction that they will be losing.

Chargebacks, either full or partial, result in fees the merchant will have to pay. The fee amount depends on the merchant’s bank and payment processor. However, fee amounts increase the higher a merchant’s chargeback ratio.

A partial chargeback does not induce a lower fee. It will show up on a merchant’s chargeback report like any other chargeback.

Partial Chargeback Scenario

A car detailing service offers a full package that includes restoring the interior, tires, and exterior. A client purchases this package and turns in their car. The customer was mostly satisfied with the service, except that the tire rims were not up to standards and looked as if they were not cared for at all.

The detailing service refuses to redo the tires and the client files a dispute against them. Upon receiving the dispute, the client requests for the chargeback to be partial instead of full. This would send a refund equal to the cost of detailing tire rims, which is what the client was dissatisfied with.

The credit card issuer involved will still charge the merchant the same fee as they would with a full chargeback.

When is a Partial Chargeback Helpful?

A partial chargeback can be a compromise a merchant proposes in a dispute.

Each credit card provider has its own processes disputes go through. These workflows allow the merchant to present evidence that would help them fight a dispute. A dispute is resolved when the credit card provider decides if a chargeback will be filed or not.

A merchant can deny or accept responsibility in a dispute process. They can also accept responsibility and ask for the chargeback amount to be reduced. This reduction would make a partial chargeback. They can argue that part of the transaction has not been accounted for, but the rest has.

Let’s say a coffee shop supplier sends in 20 packs of syrup when a cafe orders 40. Since the supplier couldn’t resolve the discrepancy in a timely manner, the cafe owner filed a dispute. They request that the full transaction be reimbursed, including the portion of the order that has been received.

The supplier accepts responsibility for failing to provide the other half of the order in time. However, they requested the bank to file a partial chargeback instead of a full one because the cafe did receive part of the order. If the bank accepts the partial chargeback, then the supplier will only pay back for the 20 packs that were not received.

How Can Merchants Prevent Partial Chargebacks?

There are many things merchants can do to prevent chargebacks in general. One is to improve and streamline your business’s customer service.

A dispute can be prevented if a merchant responds in a timely manner. Merchants have around 45 days to address the dispute. In a case like the coffee shop supplier and cafe, the supplier could have immediately sent the rest of the order. They could also send a refund or offer a discount.

Refunds in a dispute would have to happen before chargebacks hit. This takes revenue away from the company but will prevent a chargeback. It can be more costly to acquire chargebacks in the long run.

Revitpay’s chargeback alerts feature notifies merchants of an incoming dispute so that they can respond in time. Disputes can go unnoticed and it can be too late by the time businesses find out about them. Chargeback alerts prevent mounting chargebacks so that merchants have one less thing to worry about.