As part of a chargeback management program, all retrieval requests, (“RR”) must be responded to. If a merchant fails to respond to an RR, they lose all of their chargeback (“CB”) dispute rights for the given dispute. Even in the case where they have already issued a refund on the transaction for the CB that has been filed against them. This is a critical piece of a dispute management process and should be maintained properly.

Response Times for RR

It is important to keep in mind that each Payment Processor has specific policies and timelines that must be followed when responding to RRs. Anytime a procedure is implemented across all Payment Processors, adjustments will need to be made for each one to accommodate their requirements. Below are general response timelines for Domestic and International based Payment Processors. Timelines and processes vary from processor to processor so make sure you verify the guidelines from your specific processor.

Domestic Payment Processors

1. Merchant has 20 calendar days from the day the processor receives the RR to respond to it
   1. Responding within 14 calendar days is recommended
2. Many processors respond to retrieval requests on behalf of merchant

International Payment Processors

1. In general, the merchant has 5-7 calendar days from the day the processor receives the RR to respond
   1. Responding within 2 business days is recommended
2. Most International processors do not respond to RRs on the merchants’ behalf

Processing RRs:

Automating the responses to RRs is possible if the merchant’s system is integrated with their Payment Processor properly, and processor supports this functionality. In order to do so, the merchant’s system must have the capacity to know the difference between an RR and a CB, and the ability to respond appropriately. In order to expedite the process of responding to RR’s consider making a series of response templates that follow the below guidelines. This will increase the ROI for the time spent responding to these.

• Create a series of response templates that are no longer than 3 pages and should include:
  • Transaction information
  • Notice to issuing bank: Transaction has already been refunded (if applicable)
  • Company information

Proactive refunds based on RR:

A percentage of RRs will result in a CB (this percentage can vary greatly anywhere from 10% to 40%) after the merchant has responded, especially in the cases where the cardholder is claiming fraud or when there are issues with recurring payments. If a merchant needs to reduce their overall CB rate, they can implement a proactive refund program based on incoming RRs.

Below is a general outline for implementing a proactive RR refund process:

1. Proactively refund all RRs when the following is detected:
   1. If the transaction appears to be fraudulent based on the merchant’s internal fraud screening/management system
   2. Valid cancellation request (full assessment of merchant system)
   3. Reason code of the RR
   4. Additional rules can be set based on a full analysis of the merchant’s system and processor requirements
2. A proactive refund template must be sent to the issuing bank
   1. It is recommended that the merchant reaches out to the cardholder (non-fraud) as well to inform them of the refund in order to prevent the CB from occurring

Note: Even though a refund has been issued, there is no guarantee that a CB will not be filed; however, a proactive refund program can reduce the number of chargebacks.

Gina Lucas
Chargeback & Fraud/Risk Management Professional