Partial chargebacks are something you will deal with most certainly as a merchant. However, understanding why they have occurred and what they are is essential to growing.
A partial chargeback is a chargeback that returns less than the total amount of a disputed transaction. An example of this would be a customer who is unhappy with a part of the order on a purchase and chooses to do the following:
1) File a partial chargeback in which they are happy just getting some of their funds back.
2) They file a chargeback, and you counter them by offering a partial chargeback for a specific part of the order they were not pleased with.
A partial chargeback (or partial chargeback refund) refers to a chargeback that returns less than the total amount of a disputed transaction. For example, let’s say a cardholder is unhappy with one piece of a larger purchase. One of two things could happen:
- The customer files a chargeback for only the amount of that one piece that was deemed unsatisfactory.
- The customer files a chargeback for the total amount, but you counter with a partial refund that only covers the unsatisfactory parts of the order.
While partial chargebacks arenPartial chargebacks are something you will deal with most certainly as a merchant. However, understanding why they have occurred and what they are is essential to growing.
A partial chargeback is a chargeback that returns less than the total amount of a disputed transaction. An example of this would be a customer who is unhappy with a part of the order on a purchase and chooses to do the following:
1) File a partial chargeback in which they are happy just getting some of their funds back.
2) They file a chargeback, and you counter them by offering a partial chargeback for a specific part of the order they were not pleased with.
A partial chargeback (or partial chargeback refund) refers to a chargeback that returns less than the total amount of a disputed transaction. For example, let’s say a cardholder is unhappy with one piece of a larger purchase. One of two things could happen:
- The customer files a chargeback for only the amount of that one piece that was deemed unsatisfactory.
- The customer files a chargeback for the total amount, but you counter with a partial refund that only covers the unsatisfactory parts of the order.
While partial chargebacks aren’t extremely common, they do occur, and the most important thing you need to know as a merchant is whether or not you should grant a partial chargeback.
Let’s dive deeper into partial chargebacks below.
Examples Of Partial Chargebacks
When a customer is upset with the purchase and decides to file a chargeback, the dispute process occurs. If the customer is only refunded for some of the purchase, this is considered a partial chargeback.
A partial chargeback could occur because the merchant offers it or the customer only asks to be partially refunded. Suppose the customer orders six items and decides that one of the items isn’t as high-quality as the others. In that case, they can contact their issuing bank to file a chargeback for one item, resulting in a partial chargeback.
Here are a few examples:
- The cardholder receives only four out of six items due to the merchant selling a product they no longer stock.
- Cardholder decides only two out of the three items are satisfactory.
- The cardholder is charged full price for a service in which they only receive a portion – The customer pays for a first-class plane ticket but is only given a regular seat.
How Often Do Partial Chargebacks Occur?
It is important to note that partial chargebacks do not occur frequently. This is because the customer is usually moderately happy or okay with most of their purchase. They are willing to pay and aren’t always committing friendly fraud; they just don’t want to pay for items that were not satisfactory.
We find that customers who are generally happy with their purchase are more likely to contact the merchant, rather than their issuing bank. Should the customer call their bank, it could be because they don’t understand the difference between a chargeback and a refund.
As long as your customer service is up to the task, you should be able to avoid a partial chargeback or, worse, a chargeback.
Are Partial Chargebacks Bad For Merchants?
Partial chargebacks are still bad for merchants, affecting your bottom line. Merchants can contest only part of a customer’s dispute amount should they choose, just like customers can dispute part of the transaction. Visa and Mastercard handle chargebacks similarly.
Their regulations state that the chargeback amount can’t exceed the transaction amount in question.
It’s important to note that any time you are hit with a partial chargeback, you should be looking into the details as to why it happened.
Sometimes partial chargebacks occur because the merchant has poor customer service. Customer service that is lacking will result in not only partial chargebacks but also full chargebacks.
Should you be looking to lower your partial chargebacks and chargebacks significantly, sign up for a demo of our product below.
Should Merchants Offer Lesser Refunds?
While merchants could work with the customer and meet them halfway on the refund, in some cases, it’s not worth it.
Partial Chargebacks Can Damage Your Reputation
Merchants need to be careful with partial chargebacks, which could be a red flag to banks. If a merchant refuses to fight against customer claims, there could be something the merchant is presenting inaccurately that needs to get fixed.
Bank officials will look for patterns with chargebacks. If they see that a particular product is getting similar chargeback disputes, this could spell trouble for your merchant account, provided you don’t fix the issue.
Another way to view this is to think of a random product from Amazon. The first thing a customer does prior to purchasing the item is read a few reviews. Should they see a few reviews that bash your product for the same problem/error, this may deter a customer from purchasing.
It’s always wise that merchants take a step during a chargeback cycle. If the merchants are able to provide all of the information, they have an excellent chance at getting a reversal.
YOU MAY HAVE ALREADY WON
The best reason for not offering a partial chargeback amount is simple: If you have compelling evidence that at least part of the chargeback is unwarranted, you’ve got a better-than-average chance of winning a reversal.
Card network regulations say a chargeback should be filed for the disputed amount only. If the issuer or cardholder files a claim for the entire transaction amount, offering a partial refund is pointless. Even though only part of the claim was accurate, the cardholder/issuer did not process the chargeback for the correct amount. It’s a technicality that could get the entire case dismissed.
If The Customer Disputes A Transaction, Can The Merchant Offer A Partial Refund?
While merchants can do this, it’s generally not worth the hassle and time/money. You will need to prove that the cardholder was satisfied with some of their purchase.
Wrapping Up
Partial chargebacks due to merchant error are 100% avoidable; however, they can and will still occur. When you break down partial chargebacks, you will see that they come from various sources, including friendly fraud, criminal fraud, and merchant error.
We recommend that all merchants take a deep, unbiased look at all of their products. Sometimes, merchants will be able to identify potential chargeback opportunities for customers.
Remember that partial chargebacks are still not great for you as a merchant. You will need to address the cause of the chargeback in the first place. If you believe it’s friendly fraud, you will fight it the same way you would a normal chargeback.
If you want to eliminate as many partial or full chargebacks as possible, contact us today for a free demo.
‘t extremely common, they do occur, and the most important thing you need to know as a merchant is whether or not you should grant a partial chargeback.
Let’s dive deeper into partial chargebacks below.
Examples Of Partial Chargebacks
When a customer is upset with the purchase and decides to file a chargeback, the dispute process occurs. If the customer is only refunded for some of the purchase, this is considered a partial chargeback.
A partial chargeback could occur because the merchant offers it or the customer only asks to be partially refunded. Suppose the customer orders six items and decides that one of the items isn’t as high-quality as the others. In that case, they can contact their issuing bank to file a chargeback for one item, resulting in a partial chargeback.
Here are a few examples:
- The cardholder receives only four out of six items due to the merchant selling a product they no longer stock.
- Cardholder decides only two out of the three items are satisfactory.
- The cardholder is charged full price for a service in which they only receive a portion – The customer pays for a first-class plane ticket but is only given a regular seat.
How Often Do Partial Chargebacks Occur?
It is important to note that partial chargebacks do not occur frequently. This is because the customer is usually moderately happy or okay with most of their purchase. They are willing to pay and aren’t always committing friendly fraud; they just don’t want to pay for items that were not satisfactory.
We find that customers who are generally happy with their purchase are more likely to contact the merchant, rather than their issuing bank. Should the customer call their bank, it could be because they don’t understand the difference between a chargeback and a refund.
As long as your customer service is up to the task, you should be able to avoid a partial chargeback or, worse, a chargeback.
Are Partial Chargebacks Bad For Merchants?
Partial chargebacks are still bad for merchants, affecting your bottom line. Merchants can contest only part of a customer’s dispute amount should they choose, just like customers can dispute part of the transaction. Visa and Mastercard handle chargebacks similarly.
Their regulations state that the chargeback amount can’t exceed the transaction amount in question.
It’s important to note that any time you are hit with a partial chargeback, you should be looking into the details as to why it happened.
Sometimes partial chargebacks occur because the merchant has poor customer service. Customer service that is lacking will result in not only partial chargebacks but also full chargebacks.
Should you be looking to lower your partial chargebacks and chargebacks significantly, sign up for a demo of our product below.
Should Merchants Offer Lesser Refunds?
While merchants could work with the customer and meet them halfway on the refund, in some cases, it’s not worth it.
Partial Chargebacks Can Damage Your Reputation
Merchants need to be careful with partial chargebacks, which could be a red flag to banks. If a merchant refuses to fight against customer claims, there could be something the merchant is presenting inaccurately that needs to get fixed.
Bank officials will look for patterns with chargebacks. If they see that a particular product is getting similar chargeback disputes, this could spell trouble for your merchant account, provided you don’t fix the issue.
Another way to view this is to think of a random product from Amazon. The first thing a customer does prior to purchasing the item is read a few reviews. Should they see a few reviews that bash your product for the same problem/error, this may deter a customer from purchasing.
It’s always wise that merchants take a step during a chargeback cycle. If the merchants are able to provide all of the information, they have an excellent chance at getting a reversal.
YOU MAY HAVE ALREADY WON
The best reason for not offering a partial chargeback amount is simple: If you have compelling evidence that at least part of the chargeback is unwarranted, you’ve got a better-than-average chance of winning a reversal.
Card network regulations say a chargeback should be filed for the disputed amount only. If the issuer or cardholder files a claim for the entire transaction amount, offering a partial refund is pointless. Even though only part of the claim was accurate, the cardholder/issuer did not process the chargeback for the correct amount. It’s a technicality that could get the entire case dismissed.
If The Customer Disputes A Transaction, Can The Merchant Offer A Partial Refund?
While merchants can do this, it’s generally not worth the hassle and time/money. You will need to prove that the cardholder was satisfied with some of their purchase.
Wrapping Up
Partial chargebacks due to merchant error are 100% avoidable; however, they can and will still occur. When you break down partial chargebacks, you will see that they come from various sources, including friendly fraud, criminal fraud, and merchant error.
We recommend that all merchants take a deep, unbiased look at all of their products. Sometimes, merchants will be able to identify potential chargeback opportunities for customers.
Remember that partial chargebacks are still not great for you as a merchant. You will need to address the cause of the chargeback in the first place. If you believe it’s friendly fraud, you will fight it the same way you would a normal chargeback.
If you want to eliminate as many partial or full chargebacks as possible, contact us today for a free demo.