A chargeback is the reversal of a credit card payment directly by the bank. Once a refund claim is initiated by the cardholder, the bank reports the same to RTN Pay and an official inquiry is initiated.

If the merchant is unable to prove that the transaction is valid, the bank will take back from their account the disputed value and also an extra fee. However, if the customer’s claim is found to be false, the merchant need not pay any refund.

A chargeback is intended for consumer protection and if a fraudulent transaction is established, the bank refunds the amount charged by the merchant to the cardholder.

A chargeback might happen for several reasons:

  • Fraudulent transaction by way of credit card theft/misuse.
  • Item not received.
  • Item damaged in transit.
  • Technical problems - eg. customer being charged twice by error or account being charged even when transaction was declined.
  • Miscommunication - A customer may dispute a charge because of being unaware that shipping was not included in the base price.


Chargeback vs. Refund

Chargebacks can be quite costly for a business. In addition to losing money or products, the merchant risks his account being labeled as fraudulent, affecting his business and reputation. On the other hand, a voluntary refund is strictly between the merchant and the customer.  It is always better for the merchant to work out a refund with the customer whenever possible and avoid the dispute proceeding to a chargeback.



What the Merchants can do to Prevent Chargebacks:

  • Observe chargebacks to identify consistent trends like incorrect product or late delivery - and take measures to rectify.
  • Be transparent with terms of business-like return policy, have it prominently displayed so there are fewer chances of disputes.
  • Set up order tracking workflows to keep the customer updated.
  • Keep meticulous records of customer data to avoid potential fraud.
  • Partner with a reputed payment processor that adheres to industry security guidelines and can use their expertise to protect your hard-earned revenue.

RTN Policy on Chargebacks and Refunds

A customer has a timeframe of 180 days to file a Chargeback and charges are reversible during that time. A high number of Chargebacks may lead to the Banks penalizing the business to the extent of a ban on online payment services.

As per our policy, the Merchant explicitly agrees that all payments made in respect of any Customer Order, in respect of which the Customer or Issuing Bank raises a claim, demand, dispute or Chargeback on RTN Pay or the Facility Providers for any reason whatsoever, or in case of refund initiated by the Merchant, shall be the financial responsibility of the Merchant. Once a dispute is raised by customer and RTN Pay is intimated of same by the bank, we shall notify the Merchant.

Merchant would then be required to assess the dispute and provide a detailed explanation regarding the product/service delivery and proof of delivery, invoices, or whatever proof that may be required to be submitted.

It will be the sole responsibility of the Merchant to provide documents as proof in a timely fashion, failure to do so may result in the merchant losing the Chargeback. There is generally a window of 5 working days to represent the Chargeback.

Once the Chargeback is received and the Merchant is ordered to make payment of the Chargeback amount, or in case of Refund, once the Refund requested is initiated by the Merchant, the Merchant shall make the payment without demur.

The Merchant shall make the payment of Chargeback amount within 48 hours from the time of receiving the request for making payment of Chargeback, and/or in case of Refund, immediately at time of initiating the refund.

The Merchant explicitly agrees that all Refunds and Chargebacks shall be the sole responsibility of the Merchant and RTN Pay shall not be liable for any claims or disputes which may arise in connection with such Refunds or Chargebacks to the Merchant.

If RTN Pay and/or the Facility Providers determine that the Merchant and/or its business associates registered with RTN Pay are incurring an excessive amount of Chargebacks or Refunds, RTN Pay holds authority to establish controls or conditions governing the transactions or even terminate or suspend our services.