A Complete Merchant’s Guide to Partial Chargebacks:

Life is rarely black and white. When it comes to chargebacks, you might think that the issuing bank will always decide simply yes or no, either reversing the entire amount charged or declining to reverse it full-stop. In practice, however, banks will sometimes issue partial chargebacks.

Merchants should be prepared to deal with partial chargebacks and mitigate them when possible. The immediate loss of revenue stings, and in the long run, rising fees and payment processing costs add up to an even graver threat.

Successfully disputing chargebacks can help ensure a healthy chargeback ratio and reduce costs for merchants. Vitally, a poor chargeback ratio may result in increased fees per chargeback and some payment processors may decline working with your company.

Let’s take a quick look at partial chargebacks, why they occur, and how merchants can protect themselves.

Partial Chargebacks: What Are They?

A partial chargeback is simply any amount returned that is less than the original full transaction. If a customer bought a product for say $100 and then secured a chargeback for $10 or $90, in both cases it’d be a partial chargeback.

That said, a partial chargeback still counts the same as a full chargeback when calculating your chargeback ratio. A high chargeback ratio could result in increased processing fees and payment processors may decline to work with you.

Rules stipulate that the maximum amount that a bank can claw back cannot exceed the initial charge amount. Banks can and will levy chargeback fees on top of the reversed amount, however, with fees costing as much as $100 per chargeback.

While rules set an upward maximum amount of what can be charged, there’s no minimum amount. Thus, partial chargebacks.

Chargebacks are designed largely to protect consumers from fraudulent charges, say if someone steals a customer’s credit card and makes unauthorized purchases. In these cases, banks side with their customer and the merchant suffers the losses.

With partial chargebacks, however, fraud often isn’t the root cause. If a fraudulent purchase has occurred, the issuing bank will likely refund the whole purchase, not just part. Let’s take a look at some of the common causes of partial chargebacks.

When and Why Do Banks Issue Partial Chargebacks?

Often, partial chargebacks are the result of poor communication or dissatisfaction stemming from only part of a purchase. For example, if a customer pays $20 for 3-day expedited shipping and handling, but the product doesn’t arrive until a week later, the customer may request a chargeback specifically for the shipping and handling. The bank, in turn, may issue a partial chargeback, say for $20. The merchant will likely also be hit with a chargeback fee, raising costs even further.

In practice, partial chargebacks are generally less common than full chargebacks and are often the result of miscommunication, mishandled shipping, and other similar issues. Billing problems can also result in partial chargebacks. A legitimate discount code, for example, may not have been applied or something else with the payment system failed. A customer may have been double charged, for example.

A customer may also not receive all of their orders. If someone orders three pairs of shoes but only two arrive, they may request a chargeback for the lost pair of shoes.

Merchants should take care to clearly communicate with customers. If multiple items are being shipped in separate boxes, the merchant should provide tracking data and updates for each package.

Fraudsters looking to score free products or otherwise bilk merchants will often aim for a full chargeback rather than just part. Still, unscrupulous customers could try to save some unearned cash by disputing part of a charge, say claiming that only some of the products they ordered arrived, when in fact, all the products did.

Disputing Partial Chargebacks

Merchants can dispute a partial chargeback just like a full chargeback. As with all chargebacks, there are steps you can take to increase the likelihood of successfully disputing each chargeback:

• Documentation, including proof of delivery and receipts
• A clear, defined, and easy to find refund and exchange policy
• Evidence that a product has been used by the customer
• IP addresses, Card Verification Values, and other evidence that the purchase was legitimate
• Any correspondence between the customer and company, such as email and texts

If a customer has requested a chargeback, the acquiring bank will inform the merchant. Then should the merchant dispute the chargeback, they will enter the chargeback representment phase. During representment, the merchant can present evidence that the purchase was legitimate, that all products were received, and that the order was handled properly. Then, the merchant can request that the chargeback be reversed.

Besides furnishing evidence such as receipts, the merchant should also submit a detailed chargeback rebuttal letter. In this letter, the merchant should clearly argue their case, using evidence to back up their claims. This chargeback rebuttal letter doesn’t have to be long, but it should be clear and merchants should back up their case with as much evidence as possible.

Merchants will have to meet various deadlines throughout the representment process. If the merchant misses key dates, they’re less likely to successfully dispute chargebacks. You’ll need to present compelling evidence and a strong argument, on time, to successfully dispute each case.

Fortunately, a chargeback management platform will help keep you apprised of important dates and deadlines. You can also use the platform to organize evidence and to put together your case. A chargeback management platform will also make it easier to notice trends, such as problems with shipping and handling.

Preventing Partial Chargebacks

As they say, an ounce of prevention is worth a pound of cure. Merchants should take proactive steps to reduce the risk of chargebacks, both partial and full.

If something does go wrong with the order, merchants should make it easy for customers to get their money back without having to resort to chargebacks. It's typically better to refund the customer for missing products, errant charges, misprices, and other issues. Doing so will help you avoid chargeback fees and will keep your chargeback ratio lower.

No matter the chargeback, a chargeback management platform can help. A chargeback management platform makes it easier to organize your chargeback cases and rebuttals. This may lead to more successful disputes for the merchant, which will help keep your chargeback ratio low, and keep your revenue retention higher. This could save you a lot in fees and lost revenues while also making it less likely that a payment processor will drop you.