Representment explained — Chargeback Representment 101

Backspace Tech
5 min readMar 17, 2023
Representment 101

While it is a customer’s right to raise a chargeback, it is a merchant’s right to go for a chargeback representment.

If you are wondering, what is a representment? Who does what in this process, and why is this an important step that an acquirer and merchant should take note of?

Then you are in the right place.

Representment is a term that refers to the process of disputing a chargeback by a cardholder’s bank and providing evidence to prove that the transaction was valid.

Chargebacks occur when a customer disputes a transaction with their bank, and the bank reverses the transaction and refunds the customer’s money.

A merchant disputes a chargeback by presenting evidence that the transaction was valid and should not have been reversed. This is an important step for merchants to take to protect themselves against fraudulent chargebacks and other types of chargebacks that are not valid.

The usual scenario:

Chargebacks typically begin when a cardholder contacts their card issuer to dispute a charge on their account, providing the reason for the dispute and any evidence they have to support their case.

The issuer may ask if the cardholder has first contacted the merchant to resolve the issue, but in most cases, customers might falsely claim to have contacted the merchant, just to move things along.

If the cardholder claims that fraud has occurred, the issuer may investigate and gather information to support the fraud claim, even before the merchant is aware of the potential chargeback. There are usually two outcomes to this situation:

Outcome 1:

If the reason for the dispute is found valid, the issuer might release a provisional credit to the cardholder’s account and forward the chargeback claim to the concerned acquirer by routing it through the respective card network.

So, in a general sense, here are the steps that constitute the representment process, if the result of the chargeback submission is Outcome 1:

  • Notification: The merchant receives a notification of the chargeback from their payment processor or acquiring bank.
  • Investigation: The merchant gathers all relevant information about the transaction, such as the order details, shipping information, and customer communication. The merchant must then review this information and determine whether there is evidence to support the validity of the transaction.
  • Decision: If the merchant decides to dispute the chargeback, they must prepare a representment case and submit it to the appropriate card network or issuing bank.
  • Preparation: The representment case must include all relevant evidence to support the validity of the transaction, such as shipping receipts, customer signatures, and communication logs. It is important for merchants to ensure that they provide complete and accurate information at this stage.
  • Submission: The merchant submits the representment case to the appropriate card network or issuing bank, along with any required forms or documentation.
  • Anticipation: The merchant must wait for a response from the card network or issuing bank, which can take several weeks.
  • Resolution: If the representment is successful, the chargeback will be reversed, and the merchant will receive the funds for the original transaction. If it is unsuccessful, the chargeback will be upheld, and the merchant will not receive the funds for the transaction.

Outcome 2:

In case the cardholder’s reason doesn’t really fit the dispute criteria, the issuer will redirect them to resolve the issue with the merchant directly.

And in the case of Outcome 2, it is completely up to the merchant to decide the next steps based on their business policies.

Now that we have the basic outline of how representment works, let’s get into detail as to what it entails in the dispute cycle if the verdict is Outcome 1.

Notification stage:

In this stage, the merchant/acquirer/payment processor has two options.

  • They can accept chargebacks that fall within a certain threshold. Usually, the criteria for this are the amount disputed. For example, any chargeback request that comes within Rs.100 will be accepted by either of these parties on behalf of the merchant without any representment.
  • In case of a higher amount, the merchant or acquirer on behalf of the merchant must either accept or fight the chargeback by presenting the representment package.

Evidence and decision stage:

Here, the merchant must put together a chunk of evidentiary documentation based on their mode of business. These documents are also known as compelling evidence to establish the fact that the transaction is legitimate. Along with these, the merchant must also submit a rebuttal letter, that summarizes their situation regarding the chargeback.

This representment package is sent to the issuer via the acquirer, who then decides on reversing or awarding the chargeback.

But that is not all; there are more nuances to Representment, in a way can also be termed a consequence of this activity.

  • The primary point to be noted is that even if the merchant wins the chargeback, they still need to pay the chargeback fee for the administrative work involved in settling the dispute.
  • A high number of chargebacks will increase the chargeback ratio, thereby branding them as High-risk merchants.
  • To cover the losses arising from chargebacks, the merchant reserve account holding might be increased by the acquirer.
  • Too many chargebacks and unrepresented chargebacks will add the merchant to the MATCH list, and they would lose their payment processing privileges.

How to combat these consequences?

In a nutshell, these processes detailed above almost always depend on the stage and Outcomes (1 or 2). It becomes a strenuous activity for the acquirer to fight the chargeback on behalf of the merchant, as often there is a huge delay in receiving the right evidence or too many back-and-forth conversations. At the end of the day, chargebacks are not challenged, and the merchant faces a loss coupled with fees and other costs.

This delay is caused by the following reasons:

  • Manual process of intimating the merchant about the chargeback
  • Merchant is not knowledgeable about the consequences of chargeback
  • Merchant is not aware of the time limit set for a chargeback representment

Swapping this process from manual to digital will be of immense help to both acquirers and their networks of merchants. And that’s where Unified Dispute Management (UDM) comes in. With automatic reminders about the chargeback TATs, merchants can easily relay their representment package to their concerned acquirer within 21 days and fight the chargeback fair and square.

UDM streamlines the complete dispute process in a digitized manner with the help of AI, and it empowers your merchant to keep their merchant risk score at an optimal level.

But that’s not all, UDM has many more capabilities and features that can digitize your chargeback process.

Get in touch with us today to know more about UDM and how it can help your merchants regulate, tailor and modernize their chargeback process and responses.

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Backspace Tech

Backspace Tech offers Fintech-as-a-Service to automate,simplify, and disrupt the payment industry by handling chargeback requests through a plug-and-play model.