What is a Retrieval Request? Understand and Avoid Chargebacks

As a merchant, you may have heard of the term "Retrieval Request" but are not entirely sure what it means or how it affects your business. In this guide, we will provide you with a comprehensive understanding of Retrieval Requests and how to manage them effectively in 2023.

A Retrieval Request is a request made by a cardholder's bank to a merchant's acquiring bank for additional information regarding a transaction. This information may include details such as the date and time of the transaction, the amount charged, and the merchant's name.

Retrieval Requests typically occur when a cardholder disputes a transaction, and their bank needs more information to determine whether the transaction was legitimate or fraudulent. Retrieval Requests can also occur for other reasons, such as when a cardholder needs more information about a transaction for their records.

As a merchant, it is important to understand Retrieval Requests because they can lead to more serious issues such as Chargebacks or Account Suspensions if not handled correctly. Therefore, being knowledgeable about Retrieval Requests can help you prevent these issues and maintain a healthy business relationship with your customers and banks.

In the following sections of this guide, we will dive deeper into the Retrieval Request process, best practices for preventing and managing Retrieval Requests, consequences of unresolved Retrieval Requests, and how to stay up-to-date on changes to Retrieval Requests. Stay tuned to learn more.

Retrieval Request Process

Retrieval requests are initiated by the issuing bank to request information about a specific transaction. The request can be initiated for various reasons such as an inquiry by the cardholder or a suspicion of fraud. In this section, we will discuss the retrieval request process, the timeline for the request, and the types of retrieval requests.

How do Retrieval Requests Work?

Retrieval requests are initiated by the issuing bank and sent to the acquiring bank or payment processor. The acquiring bank or payment processor then forwards the request to the merchant. The merchant is required to provide the requested information within a specific time frame to avoid penalties.

Who Initiates Retrieval Requests?

Retrieval requests are initiated by the issuing bank, which is responsible for the cardholder's account. The request is sent to the acquiring bank or payment processor, which then forwards the request to the merchant.

Timeline for Retrieval Requests

The timeline for responding to a retrieval request is crucial. Merchants are required to provide the requested information within a specific time frame to avoid penalties. The timeline for responding to a retrieval request is typically 7-10 days.

Types of Retrieval Requests

There are three types of retrieval requests, including:

1. First Chargeback Requests

A first chargeback request is a request for information initiated by the issuing bank after a cardholder has disputed a transaction. The request is sent to the acquiring bank or payment processor, which then forwards it to the merchant. The merchant is required to provide the requested information to the acquiring bank or payment processor to avoid a chargeback.

2. Second Chargeback Requests

A second chargeback request is initiated when the issuing bank is not satisfied with the response to the first chargeback request. The issuing bank will escalate the dispute to the next level and send a second chargeback request to the acquiring bank or payment processor. The merchant is required to provide the requested information within the specified time frame to avoid a chargeback.

3. Pre-Arbitration Requests

A pre-arbitration request is initiated when the issuing bank is not satisfied with the response to the second chargeback request. The issuing bank will escalate the dispute to the next level and send a pre-arbitration request to the acquiring bank or payment processor. The merchant is required to provide the requested information within the specified time frame to avoid arbitration.

Preventing Retrieval Requests

As a merchant, it is essential to take proactive measures to prevent retrieval requests from occurring. By doing so, you can avoid the inconvenience, costs, and potential penalties associated with retrieval requests.

Here are some best practices for preventing retrieval requests:

1. Address Verification Service (AVS): This service compares the billing address provided by the customer with the address on file with the issuing bank. It helps to verify the identity of the cardholder and reduces the risk of fraudulent transactions.

2. Card Code Verification (CCV): Also known as CVV or CVC, this code is a three or four-digit security code printed on the back of the credit card. By requiring customers to enter this code during checkout, you can verify that the person making the purchase has the card in their possession.

3. Transaction Descriptors: Clearly describe your products or services in the transaction descriptor to ensure that customers recognize the transaction on their bank statements. A clear descriptor can reduce confusion and prevent customers from initiating a retrieval request.

4. Merchant Category Codes (MCC): Ensure that your MCC accurately reflects the type of business you operate. By using the correct MCC, you can avoid potential disputes or confusion with card issuers.

5. Customer Service: Providing excellent customer service can go a long way in reducing retrieval requests. Respond to customer inquiries promptly and provide clear communication about order status, shipping, and returns.

6. Payment Gateway: Use a secure and reliable payment gateway that complies with industry standards such as Payment Card Industry Data Security Standard (PCI DSS).

7. Transaction Reviews: Regularly review your transactions for unusual or suspicious activity. If you notice any red flags, take immediate action to prevent fraud.

Managing Retrieval Requests

As a merchant, managing retrieval requests is an important aspect of your business. Retrieval requests can result in chargebacks and can have negative consequences on your business if not managed properly. 

Here are some key steps to managing retrieval requests:

How to Respond to Retrieval Requests?

When you receive a retrieval request, it is important to respond promptly and provide accurate information. The information you provide will help the card issuer decide on the dispute. Here are some steps to follow when responding to a retrieval request:

1. Review the request: Carefully read the request and make sure you understand the reason for the request.

2. Gather information: Collect all relevant information related to the transaction. This may include transaction details, receipts, shipping information, and any other relevant documentation.

3. Respond on time: Respond to the request as soon as possible. Late responses may result in chargebacks.

4. Provide accurate information: Ensure that the information you provide is accurate and complete. Inaccurate or incomplete information may result in chargebacks.

Retrieval Request Responses Timeline

When you receive a retrieval request, you have a specific timeline in which to respond. The timeline varies depending on the type of retrieval request. Here are the timelines for each type of retrieval request:

• First Chargeback Requests: Merchants have 45 days from the date of the request to respond.
• Second Chargeback Requests: Merchants have 30 days from the date of the request to respond.
• Pre-Arbitration Requests: Merchants have 10 days from the date of the request to respond.

It is important to respond within these timelines to avoid chargebacks.

Common Errors in Retrieval Request Responses

When responding to retrieval requests, it is important to avoid common errors. Here are some of the most common errors:

1. Providing incomplete or inaccurate information

2. Failing to respond within the timeline

3. Not providing documentation to support your response

4. Failing to dispute the chargeback if it occurs

It is important to avoid these errors to prevent chargebacks.

How to Avoid Common Errors

To avoid common errors when responding to retrieval requests, follow these steps:

1. Ensure that all information is accurate and complete.

2. Respond within the required timeline.

3. Provide documentation to support your response.

4. If a chargeback occurs, dispute it promptly.

By following these steps, you can avoid common errors and manage retrieval requests more effectively.

Retrieval Request Resolution

Retrieval requests are part of the chargeback process, which occurs when a cardholder disputes a transaction. As a merchant, it's important to understand how to respond to retrieval requests to resolve them efficiently and minimize the risk of chargebacks. 

How to Resolve Retrieval Requests?

When you receive a retrieval request, it's important to respond promptly and accurately. The request will typically include details about the disputed transaction, such as the transaction amount, date, and cardholder name. You should review this information carefully and provide any additional documentation or evidence that supports your position.

Responding to Chargebacks

If the retrieval request is not resolved to the card issuer's satisfaction, it may progress to a chargeback. At this stage, the card issuer will provide you with a chargeback notification, which will include details about the chargeback reason code and the evidence provided by the cardholder. 

You will need to review this information carefully and provide a compelling response that addresses the specific reason code and includes any supporting documentation or evidence. 

Fighting Chargebacks

If your chargeback response is not successful, you may have the option to escalate the dispute to pre-arbitration or arbitration. This is a more formal process that involves presenting your case to an arbitration panel, which will make a final ruling on the dispute. 

It's important to note that the costs and timelines associated with this process can be significant, so you should weigh the potential benefits against the risks and costs before pursuing this option.

Pre-Arbitration and Arbitration Requests

Pre-arbitration requests and arbitration requests are typically initiated by the card issuer and involve presenting evidence and arguments to an arbitration panel. These requests can be costly and time-consuming, so it's important to have a strong case and clear evidence to support your position.

Consequences of Unresolved Retrieval Requests

Retrieval requests can have severe consequences for your business, especially if left unresolved. Unresolved retrieval requests can result in chargebacks, which can lead to hefty fees and penalties, account suspension, or even termination. It is crucial to take retrieval requests seriously and take immediate action to resolve them.

Consequences of Unresolved Retrieval Requests

One of the most significant consequences of unresolved retrieval requests is chargebacks. When a retrieval request is initiated, the card issuer is seeking more information about a transaction. If the information is not provided, the issuer may initiate a chargeback, which is a demand by the cardholder's bank to reverse the transaction and refund the money.

Chargebacks can result in significant losses for merchants. Merchants may lose the sale, the merchandise, and the revenue from the sale. In addition, merchants may be subject to chargeback fees, which can range from $20 to $100 per chargeback.

Possible Fees and Penalties

Unresolved retrieval requests can also result in fees and penalties from the payment processor. Payment processors may charge a retrieval request fee, which is a fee charged to merchants for the cost of retrieving transaction information. The fee can range from $5 to $15 per retrieval request.

In addition, payment processors may impose penalties for chargebacks. These penalties can range from $10 to $100 per chargeback and can add up quickly, resulting in substantial financial losses for merchants.

Impacts on Future Business Dealings

Unresolved retrieval requests can also impact future business dealings. High chargeback rates can result in merchants being classified as high-risk merchants, which can make it difficult to obtain payment processing services or result in higher processing fees. High-risk classification can also result in difficulty obtaining loans or other financial services.

Risk of Account Suspension or Termination

Unresolved retrieval requests can also result in account suspension or termination. Payment processors may suspend or terminate accounts with high chargeback rates, leaving merchants without a means of accepting payments. This can result in a loss of revenue, damage to the merchant's reputation, and the need to find an alternative payment processor.

Staying Up-to-Date on Retrieval Requests

Staying Up-to-Date on Retrieval Requests is crucial for merchants to ensure their business runs smoothly and without any interruptions. Retrieval Requests can occur for various reasons, and it's important to be aware of any changes or updates to these requests to prevent any potential issues. In this section, we'll discuss how merchants can stay informed on changes to Retrieval Requests, industry news, and resources available for merchants.

Staying Informed on Changes to Retrieval Requests

Retrieval Requests are an essential part of the payment processing system, and it's important to stay informed about any changes or updates to the requests. Payment processors and card networks regularly update their policies, and merchants must keep up with these changes to avoid any potential issues. 

You can stay informed about any updates or changes by regularly checking the payment processor's website or subscribing to their newsletter. In addition, payment processors may also send updates and alerts through email or notifications to keep merchants informed about any changes.

Industry News and Developments

Staying up-to-date on industry news and developments can help merchants better understand the payment processing system and any changes that may impact their business. It's essential to follow trusted sources such as industry associations, payment processors, and card networks to stay informed about any industry updates or changes.

Industry Resources for Merchants

Merchants can access various resources to stay informed about Retrieval Requests, payment processing, and industry updates. Payment processors may offer educational resources, such as webinars, blog posts, and whitepapers, to help merchants stay informed about any changes or updates. Additionally, industry associations or forums provide a platform for merchants to discuss any issues or updates related to payment processing.

Final Thoughts

In conclusion, understanding retrieval requests and managing them effectively is crucial for merchants to protect their businesses from financial losses and reputational damage. As a merchant, you must take proactive measures to prevent retrieval requests, such as implementing best practices for transaction reviews, using address verification services, and maintaining excellent customer service. 

In case of a retrieval request, it is essential to respond promptly and accurately, providing all the necessary documentation and evidence to support your case. Ignoring or mishandling retrieval requests can result in chargebacks, fines, and even account suspension or termination. 

To stay up-to-date on the latest changes to retrieval requests, you should monitor industry news and developments and take advantage of industry resources for merchants. By staying informed and proactive, you can minimize the risk of retrieval requests and ensure the long-term success of your business.

Remember, prevention is always better than cure. By following best practices, you can reduce the likelihood of retrieval requests and protect your business from potential losses. In conclusion, managing retrieval requests is an essential aspect of any merchant's operations, and understanding how to prevent, respond, and resolve them is crucial for success in 2023 and beyond.