Chargeback Management

Localpayment enables you to manage chargebacks through the Merchant Dashboard interface. This guide covers the complete chargeback management workflow, from understanding what chargebacks are to effectively responding to them within required timeframes.

Before You Begin

Ensure you have:

Additional Chargeback Management Requirements

• User role with chargeback permissions (see User Roles documentation).
• Understanding of chargeback reasons and dispute processes.
• Access to transaction documentation and evidence.
• Awareness of 7-day response timeframe for chargeback disputes.

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Understanding Chargebacks

What is a Chargeback?

A chargeback is a consumer protection mechanism that allows cardholders to dispute transactions directly with their bank or card issuer. When a customer disputes a charge, the bank temporarily reverses the payment while investigating the claim, providing an additional layer of security beyond standard refund processes.

How Chargebacks Work

The chargeback process follows this sequence:

1. Customer Initiates Chargeback: Cardholder disputes transaction with their bank
2. Acquirer Notifies Localpayment: Payment processor alerts Localpayment
3. Localpayment Notifies Merchant: You receive notification via Dashboard
4. Merchant Responds: You complete or dispute the chargeback within 7 days

Common Chargeback Reasons

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Timeframe: You have exactly 7 days from notification receipt to respond to a chargeback. If no response is received, the chargeback will be completed automatically in favor of the cardholder.

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Implementation Guide

Localpayment provides chargeback management through the Merchant Dashboard interface for comprehensive visual management and streamlined workflow processing.

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Chargeback Workflow

Step 1: Notification and Assessment

When a chargeback is initiated, you'll receive a webhook notification. Immediately assess the situation:

• Review chargeback reason provided by the cardholder's bank.
• Identify the transaction and gather relevant documentation.
• Determine response strategy - whether to complete or dispute the chargeback.

Step 2: Evidence Collection

For disputed chargebacks, compile appropriate evidence based on the transaction type:

Physical Products

• Shipping documentation with complete delivery address
• Tracking numbers and carrier confirmation
• Proof that shipping date precedes the dispute date
• Signed delivery confirmation or receipt

Best Practices:

• Ensure tracking information is up to date and accessible
• Maintain records for the required retention period
• Include customer communication about shipping updates
• Verify the delivery address matches the billing address

Digital Products & Services

• Server access logs showing customer activity
• IP addresses and timestamps of usage
• Download records or access timestamps
• Email confirmation of purchase or service activation
• Signed contracts or service agreements

Best Practices:

• Maintain detailed access logs for at least 180 days
• Keep records of customer authentication
• Document any trial periods or free usage

General Evidence

• Cardholder signature on order forms or contracts
• Identification presented during the transaction
• Evidence of previous non-disputed payments
• Customer communication history

Best Practices:

• Maintain clear communication records
• Document customer consent for recurring payments

Step 3: Response Submission

Submit your complete response package through the Dashboard within the 7-day window. Ensure all documentation is clear, legible, and directly addresses the chargeback reason.

Step 4: Outcome Resolution

After submitting your dispute, the chargeback progresses through these statuses:

Dispute Outcomes

• DisputeWon: Evidence successfully reversed chargeback.
• DisputeLost: Evidence insufficient, chargeback remains.

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Balance Impact: When a chargeback is notified, the original Payin value is reserved until resolution. If you win the dispute, funds are returned to your account.

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Chargeback Status Reference

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Prevention Strategies

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Next Steps