Here is a guide to dealing with credit card rejections! Alibaba International Station's rejection processing service has covered more than 90,000 foreign trade merchants

The reporter learned from Alibaba International Station that in response to the credit card decline problem encountered by foreign trade merchants in cross-border transactions, the credit card decline processing service ( hereinafter referred to as the "decline processing service") launched by the platform has covered more than 90,000 foreign trade merchants.

It is reported that Alibaba International Station's chargeback processing service is an optional service launched by the platform to improve the merchant experience. During the service period, once a buyer's credit card chargeback occurs , the merchant provides defense materials that meet the requirements of the Alibaba platform and is reviewed and approved . If the merchant loses the defense, Alibaba International Station will provide the merchant with a refund-free service within a certain range according to the agreement .

Data shows that in 2021 alone , Alibaba International Station invested tens of millions of dollars in this service to help merchants bear part of their losses.

Anyone who does foreign trade knows that overseas users love to use credit cards. Overseas banks give credit card users a special right: to refuse payment. Credit card refusal , also known as chargeback or withdrawal , can be initiated by the cardholder within a "certain period" after payment . This "certain period" is usually 120 days , but can be extended to 540 days for some reasons .

Overseas banks' "goodness" to users , in turn, is a risk factor that foreign trade merchants have to pay more attention to during the transaction process. Because once the buyer initiates a credit card chargeback, the card issuing bank will notify the merchant to defend , and then the merchant must submit defense materials within the prescribed time limit , usually 7 days . The card issuing bank will make a final decision based on the content and materials of the defense . Once the case is lost, not only does it mean that the money in hand is "flying away", but also facing the very headache of cross-border returns.

Credit card chargebacks are a matter between overseas banks, sellers and buyers , and the platform only plays a role in assisting in the defense. In response to the cross-border risk problem of "credit card chargebacks", Alibaba International Station not only launched a chargeback processing service , but also has a team of Xiaoer who is specifically responsible for chargeback defense to help merchants maximize the probability of winning the defense .

In July last year , due to the delay of sea transportation caused by the epidemic, the products of a domestic foreign trade merchant failed to be delivered on the expected delivery date of the buyer. The buyer successively initiated three credit card chargebacks for "non-receipt of goods", involving a chargeback amount of about US $40,000, equivalent to about RMB 300,000 . During the defense, the chargeback defense clerk of Alibaba International Station learned the specific cause of the dispute and the current information on the logistics of the goods. In addition to providing defense services, it also took the initiative to help both parties rebuild a trusting relationship and confirm the willingness of both parties to reconcile. The buyer and seller fully communicated and negotiated with each other on the disputes in the trade. The seller resold part of the goods, and the buyer also withdrew the chargeback . Finally, the order dispute was successfully resolved , and the cooperation between the buyer and seller continued .

Relevant industry insiders also remind foreign trade merchants that although credit card rejections cannot be completely avoided, the risk of rejections can be greatly reduced by confirming more contract details during the transaction, communicating more during the fulfillment process, and paying more attention to after-sales disputes.

Attachment:

"Strategy: How Foreign Trade Merchants Deal with Credit Card Rejection"

What are credit card chargebacks? Can they be avoided?

With the popularity of online payment methods, cross-border merchants will inevitably encounter credit card rejections during transactions. Credit card rejections are also called chargebacks or withdrawals. It means that the cardholder can apply to the issuing bank to reject a transaction on the bill within a certain period of time after payment (usually 120 days, but can be extended to 540 days for some reasons).

Chargeback is actually a right granted by the issuing bank to the cardholder. In the dispute resolution process of chargeback, the final decision is made by the cardholder's issuing bank. No matter what platform the seller uses to complete the credit card payment, such risks cannot be completely avoided.

What is the general process of credit card chargeback? Can the platform be involved?

The general process of credit card chargeback is: the cardholder initiates a chargeback application to the issuing bank --》the issuing bank notifies the payee to file a defense--》the payee submits defense materials within the prescribed time limit, which usually refers to within 7 days after receiving the defense notice--》the issuing bank makes a ruling based on the content of the payee's defense, supporting the cardholder's request or rejecting the cardholder's request--》if supported, the issuing bank will force the payee to return the money, and if not, it will collect the money.

At present, some foreign trade merchants confuse credit card chargebacks with order disputes. In fact, they are not the same and there is a big difference.

Disputes are initiated by buyers through the platform. If the two parties fail to reach an agreement, the platform will participate in arbitration. However, chargebacks are initiated directly by the cardholder through the bank. The entire chargeback process is controlled by the bank, and the judgment, that is, the arbitration result, is made directly by the bank, and the platform does not participate in it.

Can the risk of chargeback be judged in advance? Merchants should pay attention to these situations!

For credit card rejections, merchants can establish a sense of risk and make certain prejudgments about potential credit card rejection risks:

For example, in the following situations, we cannot say that there is definitely a problem, but the corresponding risk probability is relatively high and should be taken seriously.

The first type: The first-time buyer places a large order and asks to split the order into individual payments by credit card.

There is a payment limit for credit card payments. Usually, the payment limit given by the bank or platform is 10,000 to 20,000 US dollars. The existence of this limit is essentially a risk prevention strategy. If a merchant encounters a new buyer for the first time and asks for a large order right away, and proposes to split it into multiple orders and pay for them one by one by credit card, then it should be taken seriously.

The second type: The order itself is not very large, but the buyer is in a remote area, and proposes to split the order into multiple small orders for payment. This situation is often due to the poor credit of the cardholder, who is restricted by the bank to a very low single payment limit.

The third type: A buyer places multiple orders in a short period of time. The short term here may last for several days, but 1-2 orders are placed every day .

How to prevent risky orders? How important is it to clearly agree on transaction details?

If the above situations exist, merchants should be alert and be more careful. If you are sure you still want to take such an order, it is recommended that merchants take precautions .

Before an order is concluded, the details of the transaction must be clearly agreed upon, such as the standard of goods , delivery time , freight and tax . It is particularly important to emphasize that the agreement on the customs clearance fees in the country of destination must be clear. A large number of orders were rejected because the customs clearance fees in the country of destination were not clearly agreed upon in advance, resulting in buyers abandoning the goods and refusing to pay .

In addition, whether it involves import licenses and certification certificates, if it is a customized product, the content of the customization must be clearly agreed upon.

A merchant on the international site had a dispute with a buyer over the color of a customized product and was refused payment. The buyer sent a sample picture to the seller, and the seller produced it according to the sample picture. After the production was completed, the seller sent photos to the buyer, and the buyer also approved it. However, both parties overlooked a problem and did not specify the Pantone color. After receiving the goods, the buyer refused to pay because of the color deviation, and the bank supported the buyer's claim.

After the goods are produced and before shipment, we need to confirm with the buyer the quantity of the goods and whether the packaging is intact. You can choose to use pictures or videos .

If the amount of the goods is relatively large and certain standard requirements have been agreed upon, it is recommended that an inspection be conducted before shipment if conditions permit and a third-party inspection report be issued.

How to prepare for a chargeback? What is your first response when you receive a chargeback?

If the payment is rejected, the merchant does not need to panic. The bank will give the payee a chance to defend . The bank's defense will be determined based on the content of the defense materials it has. As long as the evidence is sufficient and clear, there is still a great chance of winning.

So how should merchants prepare for chargebacks?

The first reaction to receiving a chargeback: proactively contact the buyer

( 1) Confirm the reason for the refusal, that is, WHY, so that you know what more targeted materials you should provide. Because the reasons for the refusal given by the bank are very broad, such as not receiving the goods, the goods are not the same as the instructions, etc. The clearer the merchant understands the situation , the more targeted the defense will be.

( 2) Whether there is any misunderstanding in the communication and whether there is a possibility of resolution through negotiation. The cardholder has the right to initiate a chargeback and also has the right to withdraw the lawsuit.

It is worth noting that no matter whether the buyer agrees to cancel the chargeback or not, the defense must be made. This is because the defense has a time limit. If the merchant believes the buyer's verbal promise to cancel the chargeback and misses the time limit for defense, it is very likely that the merchant will be directly judged as a loser.

What should I pay attention to when submitting defense materials? If payment is refused, can I only win in full?

After Alibaba International Station receives the bank's rejection notice, it will remind the merchant via email to file a defense as soon as possible. The merchant can directly click the link in the email to submit the defense materials, or enter the rejection details page through the MA system to view the rejection information and submit the defense materials.

The specific viewing path is: My Alibaba --> Transaction Management --> Refund Management --> Chargeback Management, find the specific chargeback order, and click on the details to enter .

When submitting your defense materials, please pay attention to the following details:

Do not exceed the deadline. Usually the bank will give you a deadline of 7 days to submit your defense materials after receiving the notice . If you fail to submit your defense materials within the deadline, you will be directly judged as losing the case .

The defense materials should be submitted in accordance with the system requirements. The submitted materials should be as detailed, substantial and targeted as possible, and should not be too much trouble.

For the defense of not receiving the goods, the proof of delivery (also known as POD in the logistics field) is a very important piece of evidence. If possible, try to provide the proof of delivery signed by the recipient . Of course, some logistics service providers charge extra for hand-signed POD, which can be learned from the logistics service provider.

The materials must be in English. If there are Chinese materials, remember to note the translation.

If we do have some faults in the trade process, but not completely at fault , we can make suggestions in the defense materials and appropriately bear /recognize partial refunds . For example, if 100 pieces of goods were agreed upon , but the employee was negligent during the delivery process and sent less than 10 pieces , we can explain the matter clearly in the defense and propose to accept the return of the value of 10 of the goods, or even show a little sincerity and be willing to refund the value of 20 pieces of goods.

Don't assume that a chargeback will result in a full win or a full loss . Of course, a partial refund requires one party to claim, otherwise the bank will only make a judgment based on the amount claimed by the cardholder.

After the defense materials are successfully submitted, it will take the bank a relatively long time to make a judgment on the defense, possibly 3-6 months. This is normal, so don't worry too much and wait patiently for the result.

How do I activate the chargeback processing service ? What should I do if my application fails the review?

Alibaba International Station's chargeback processing service requires a separate application .

The activation path is : My Alibaba--》Transaction Management--》Refund Processing Service --》Activate Now, just check the box to agree to the agreement.

During the activation process, the activation qualifications need to be assessed immediately. Customers who pass the assessment will be successfully activated immediately. The whole process only takes one or two seconds .

After activation, the system will give the merchant an amount specified within the service scope for 3 months. All credit card payment orders within these 3 months will share the amount specified within this service scope .

If the review fails, it is usually because the merchant 's fulfillment data does not meet the requirements for opening, such as low on-time delivery rate, high dispute arbitration rate, etc., just pay attention to improvement. The data will be updated every month, and there will be opportunities for opening every month.

Currently, as long as the merchant can pass the opening review, the use of this chargeback processing service is completely free . At that time, if Alibaba International Station determines that it is within the scope of the service and meets the following three conditions, even if the bank ultimately judges that the merchant loses the defense, it can still enjoy the chargeback processing service:

( 1) The credit card payment occurs within the chargeback processing service cycle

(2) Submitted defense materials as required by Alibaba International Station and was reviewed and approved

( 3) Amount specified within the scope of service

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