Chargebacks vs. Retrieval Requests | What Is The Different Between The Two?

As a business, you are always looking for a way to protect your bottom line. However, since both a chargeback and a retrieval request come directly from your merchant bank, you can easily confuse them. Although getting a retrieval request is never ideal, it can be an opportunity to defuse a situation before a chargeback occurs.

Knowing the differences between the terms can help you address a problem before it spirals into a bigger headache for your business. At PeerDive, our business experts have put together this helpful guide on everything you need to know about the differences between a chargeback and a retrieval request.

What Is A Retrieval Request

Sometimes called a “soft chargeback,” the issuing bank uses a retrieval request to obtain more information about a specific transaction. A retrieval request can occur for various reasons, such as the customer did not recognize the transaction and needs more information about it, or the client was unhappy about the good/product received.

Although a retrial request is not a chargeback, they traditionally precede a chargeback on that transaction. The important thing to note is that a retrial request is an opportunity for the merchant to stop a potential chargeback from occurring. Even if the merchant does not issue a refund for the transaction, failing to respond to the retrieval request in a timely fashion disqualifies the merchant from being able to dispute a chargeback for that transaction. If the retrieval request leads to a chargeback, you have no choice but to accept the financial loss.

What Banks Use Retrieval Requests

As of October 2020, Visa announced that they would no longer allow the use of retrieval requests. This was because signatures are now optional for all transactions. Also, their Order Insight platform provides the same functionality as a retrieval request.

In addition, Mastercard does not use retrieval requests except for transactions involving Maestro-branded cars, which usually are present in the European market. As of summer 2022, other card networks such as Discover and American Express still use retrieval requests, but this might change at a future date in time.

What Is A Chargeback

A chargeback is also referred to as a reversal. It is the return of funds, usually on a credit card, to make a purchase from the end buyer for a specific transaction. A chargeback can occur for a wide variety of reasons. This includes if a customer enters into a dispute claiming that the transactions were purchased or made without prior knowledge.

For cardholders, the option to file a chargeback can protect their purchasing power from dishonest businesses, scammers, and fraud. However, for merchants, chargebacks can pose a series of threats to their cash flow.

Check out our article on everything a merchant needs to know about the chargeback process.

Retrieval Request Fees

Like in a chargeback, there are often fees associated with a retrieval request. Usually, your payment processor will charge you a small fee, typically around $15-$25 depending on your merchant account, to process the request. This fee covers the bank's costs associated with the retrieval process.

When it comes to fees, all inquiries with come with some denominal fee. For that reason, it is important to know what those fees are before signing up for a merchant account, and if there are any hidden fees you might get charged if you receive either a chargeback or a retrieval request.

How Do I Respond To A Retrieval Request

It is important to remember that a retrieval request is not a chargeback. But it can lead to one if you are not careful. That said, you should treat a retrieval request just the same as a chargeback. Depending on the reasoning code for the retrieval request, you want to submit evidence as to why your business is in the right for that code.

For example, if you receive a request with the reason "client was unhappy with the good(s)/service(s) they received," you want to submit a case as to why that claim is not valid. This can include screenshots of the client's positive reviews about your businesses, text messages, emails, past invoices, store policies, and more.

If the documents you submitted fail to satisfy the reasoning code and or they were not submitted in a timely manner, then the dispute will lead to a chargeback, and the funds will be withdrawn from your account.

Rather than relying on a post-dispute process by the banks, you should immediately reach out to your customers if they are dissatisfied with what they received. Odds are the customer will let you fix the issue before it escalates to a chargeback.

Common Retrieval Request Reasoning Codes

To prevent as many chargebacks as possible, it is important to understand why the customer choices to file that retrieval request in the first place. This is commonly explained in the reasoning code in the document you receive on a retrieval request.

Some common reasons why a client might initiate a retrieval request might be:

The customer doesn't remember making a purchase.
The transaction amount on the statement doesn't match the transaction amount agreed upon.
The customer doesn't recognize specific transaction details appearing on the statement, such as the name on their billing statement.
The customer is committing "friendly fraud" by illegitimately claiming an order was wrong or not received.

How To Avoid A Retrieval Request

Although a retrieval request is much better than a chargeback, both still require a swift response and a compelling reason to side in your favor. Avoid the headaches that come from fighting a credit card dispute. At PeerDive, we work to help prevent the likelihood of a false chargeback against your business. We created this platform to learn more about their customers before they do business with them. Users can search Peer Dive and read real reviews from other business owners who interacted with a potential client. You can find out if this particular client has a history of putting false chargebacks on a business.

Our mission is to make it a little easier for businesses to work in a fair environment where reviews are not just one-sided as they are mainly portrayed on popular review sites such as Yelp and Google Reviews. With Peer Dive, you can learn all you need to know about a client before doing business with them.

About PeerDive

PeerDive is a popular online directory created exclusively for businesses to leave and view reviews on individuals before offering their products and or services. PeerDive was created to help local businesses and their communities make the most informed decision on who they want to do business with.