This article answers the most commonly asked questions about chargebacks in RMS Pay, including how the dispute process works, what happens to funds during a chargeback, timeframes for submitting evidence, and common scenarios such as 3DS, partial refunds, and Virtual Credit Card (VCC) disputes.

Overview

A chargeback occurs when a cardholder disputes a transaction with their issuing bank and the bank reverses the payment while the case is reviewed. This article is a frequently asked questions (FAQ) and quick reference guide for common chargeback scenarios, processes, and outcomes within RMS Pay. Use the Table of Contents (In this Article) on the right of this window to jump to a specific topic.

For information on how to submit or accept a dispute, see the Defend Chargeback and Accept Chargeback articles.

Understanding Chargebacks

1. What is the difference between a refund and a chargeback?
2. Who makes the final decision on a chargeback?
3. How does a Notification of Chargeback (NOC) differ from a Chargeback Message received in the Message Centre?

1. What is the difference between a refund and a chargeback?

A refund generally occurs when a customer contacts the business directly to request a return of funds. The business then processes either a full or partial reimbursement of the original transaction. Excluding any time required for communication and approval, refunds are typically completed within three to seven business days.

A chargeback is initiated through the cardholder’s financial institution. The bank places the disputed funds on hold and may withdraw the amount from the property while an investigation is conducted. Chargeback timeframes vary but can take several weeks to several months, particularly if the property elects to dispute the claim.

2. Who makes the final decision on a chargeback?

All chargeback decisions are made by the cardholder’s issuing bank in accordance with card scheme rules.

While properties can submit supporting evidence to challenge a dispute, the final outcome is determined by the issuing bank and is not controlled by RMS Pay.

3. How does a Notification of Chargeback (NOC) differ from a Chargeback Message received in the Message Centre?

A Notification of Chargeback (NOC) is issued when RMS Pay is first informed that a dispute has been raised by the issuing bank.

A Chargeback message follows once the disputed funds have been provisionally debited from the RMS Pay account by the issuing bank.

A NOC is always followed by a Chargeback message and indicates that the dispute process has formally commenced.

The Chargeback Process

1. What happens to the account when a dispute occurs?
2. Why did I incur a chargeback fee?
3. Why was the disputed amount deducted before the final decision?
4. Why do I see the disputed funds returned after submitting my defence, but then deducted when the chargeback is lost?
5. Can I refund the transaction once a chargeback status has been applied?
6. Can I reverse the transaction once a chargeback status has been applied?
7. Can I cancel a chargeback and refund the cardholder directly?

1. What happens to the account when a dispute occurs?

RMS will send a message to the property through the Message Centre and an email to the RMS Pay contacts configured in RMS. The disputed amount is deducted from the next available payout, and the disputed receipt remains on the account in RMS.

2. Why did I incur a chargeback fee?

A non-refundable chargeback fee is incurred for all booked chargebacks as set out in your RMS Pay Agreement. This fee covers the administrative costs and chargeback fees passed on by the issuing bank and/or card scheme.

Please refer to your RMS Pay agreement for the chargeback fee amount.

3. Why was the disputed amount deducted before the final decision?

When a cardholder disputes a transaction with their bank, they initiate the chargeback process. The issuing bank will provisionally deduct the chargeback amount from the Payment Gateway provider (RMS Pay) and request additional information.

RMS Pay sends a message via the Message Centre and email to the RMS Pay contact configured within RMS.

If the property successfully defends the chargeback, it is provisionally reversed, and the funds are returned to the business until an outcome is determined.

If the defence is accepted, the funds remain with the property. If the defence is declined, the chargeback is lost and the disputed amount is deducted and returned to the cardholder. This outcome is final.

4. Why do I see the disputed funds returned after submitting my defence, but then deducted when the chargeback is lost?

When a defence is submitted, the issuing bank provisionally returns the disputed amount to the property’s account while they review the case. This is not an indication that the chargeback has been won; it confirms that the defence has been submitted and is under review.

Once the issuing bank reaches a final decision:

• If the defence is accepted, the funds remain in the property’s account.
• If the defence is declined, the chargeback is lost and the disputed amount is deducted from the property’s account and returned to the cardholder.

5. Can I refund the transaction once a chargeback status has been applied?

When a chargeback occurs, the funds are no longer available to the property, as they are held within the chargeback process while the issuing bank reviews the case. Because of this, the standard refund process is replaced by the chargeback workflow.

Once a chargeback is in progress, the receipt is locked, and no actions (including refunds or reversals) can be performed.

A refund can only be processed before a chargeback is raised, or after the chargeback has been resolved in the property’s favour and the funds have been returned.

Once the chargeback has been resolved:

• If the chargeback is lost: the funds are returned to the cardholder via the chargeback outcome.
• If the chargeback is won: the funds are returned to the property, and a refund can then be processed if required.

6. Can I reverse the transaction once a chargeback status has been applied?

Once a chargeback has been applied, the transaction cannot be reversed during the dispute period. The receipt is locked, and no further actions (including refunds or reversals) can be performed.

This also applies to refunds: once a chargeback is in progress, the standard refund process is no longer available.

When a chargeback is raised, the funds are removed from the property and held within the chargeback process while the issuing bank reviews the case.

A refund or reversal can only occur before a chargeback is raised, or after the chargeback has been resolved in the property’s favour and the funds have been returned.

The return of funds is determined by the chargeback outcome:

• If the chargeback is lost: the funds are returned to the cardholder via the chargeback process. Reversing the receipt will remove the receipt from the account only.
• If the chargeback is won: the funds are returned to the property. Reversing the receipt will remove the receipt from the account and return the funds to the cardholder.

7. Can I cancel a chargeback and refund the cardholder directly?

No. Once a chargeback is initiated, the dispute process begins. To refund the cardholder, the chargeback must be accepted.

Submitting Evidence and Deadlines

1. Can I submit additional documents after the initial evidence has been provided?
2. How much time do I have to defend a chargeback?
3. What happens if I miss the deadline to submit chargeback evidence?
4. Can I extend the deadline for submitting chargeback evidence?
5. What evidence should I provide for a chargeback?

1. Can I submit additional documents after the initial evidence has been provided?

No. Evidence can only be submitted once and cannot be altered or added to after submission.

2. How much time do I have to defend a chargeback?

The timeframe to submit evidence for a chargeback is set by the cardholder’s issuing bank and the relevant card scheme (e.g. Visa, Mastercard, Amex).

In most cases, the timeframe is limited to between 7 and 21 days from notification, however this can vary depending on the scheme and dispute type.

RMS will notify the property of the chargeback via the Message Centre and email. It is important to submit your evidence as soon as possible within this timeframe, as late submissions will not be accepted.

For specific dispute timeframes, see the Chargeback Dispute Timeframes section of the Defend Chargeback article.

3. What happens if I miss the deadline to submit chargeback evidence?

If the deadline is missed, the chargeback will proceed without a defence from the property. The issuing bank will make a decision based solely on the cardholder’s claim and available transaction information.

In these cases, the chargeback is typically considered lost, as no evidence has been submitted for review. Late submissions cannot be accepted and the case cannot be reopened.

4. Can I extend the deadline for submitting chargeback evidence?

No. The deadline is set by the issuing bank and cannot be changed.

5. What evidence should I provide for a chargeback?

When submitting evidence, provide clear documentation that supports the transaction.

Common examples include:

• Booking confirmation and reservation details
• Guest check-in and check-out records
• Proof of service delivery
• Cancellation policy and terms accepted at booking
• Communication with the cardholder
• Payment and transaction records

Evidence should clearly demonstrate that the transaction was authorised, fulfilled, and processed in line with the agreed terms.

Outcomes and Specific Scenarios

1. How will I be notified of the bank’s decision, and what happens when a chargeback is won or lost?
2. How long does it take for an outcome on a chargeback dispute to be provided?
3. Can I challenge a lost chargeback?
4. Why was the lost chargeback not removed from the account?
5. Why does the chargeback amount differ from the original transaction?
6. Why did I receive a chargeback on a 3DS transaction?
7. Why did I receive a chargeback on a refunded transaction?
8. Why did I receive a full refund amount being claimed in a chargeback instead of only the partial amount due?
9. What should I do if a cardholder is claiming a full chargeback amount when only a partial refund is applicable?
10. What does it mean if I receive a second chargeback after winning the case?
11. When does RMS Pay automatically defend a chargeback?
12. How should I handle a chargeback for a Virtual Credit Card (VCC) from an OTA?

1. How will I be notified of the bank’s decision, and what happens when a chargeback is won or lost?

The outcome will be sent to the Message Centre and the RMS Pay contact email set up in RMS.

2. How long does it take for an outcome on a chargeback dispute to be provided?

Each Card Scheme (Visa, Mastercard, Amex) has varying timeframes. It can take between 20 and 80 days for a final outcome. The bank’s decision is final.

3. Can I challenge a lost chargeback?

RMS Pay does not offer an option to appeal or challenge a chargeback once it is marked as “lost.” The issuing bank’s decision cannot be reopened once a chargeback has been marked as lost.

4. Why was the lost chargeback not removed from the account?

RMS does not remove the disputed receipt from the account. A message is sent to the property via the Message Centre, and to the RMS Pay contact, once the chargeback has been lost.

If required, the property can apply internal adjustments such as:

• A sundry credit note against the disputed sundry item
• A direct credit refund against the disputed RMS Pay receipt

5. Why does the chargeback amount differ from the original transaction?

The chargeback amount may differ from the original transaction due to:

• Partial chargeback: If a cardholder disputes only part of the transaction, the chargeback reflects the disputed portion.
• Currency exchange differences: Exchange rate fluctuations may impact the final amount when converted to the cardholder’s currency.

The Chargeback Dashboard reflects the amount in the cardholder’s currency. The RMS Pay Settlement Report shows the property currency value.

6. Why did I receive a chargeback on a 3DS transaction?

A chargeback can be initiated on any transaction, including those authenticated using 3D Secure (3DS).

3DS authentication may provide a liability shift for certain fraud-related disputes, depending on the card scheme and issuing bank. In these cases, the liability for the transaction may shift away from the property.

However, 3DS does not prevent all chargebacks. Non-fraud disputes (such as booking issues or service-related claims) may still be raised by the cardholder and will need to be reviewed through the standard chargeback process.

Some fraud-related disputes may also still be received depending on scheme rules, transaction type (including digital wallet transactions), or issuer assessment.

7. Why did I receive a chargeback on a refunded transaction?

A chargeback may still be received on a transaction that has already been refunded due to timing differences between the refund being processed and the cardholder initiating the dispute.

In some cases, the refund may not have fully settled or been confirmed by the issuing bank at the time the chargeback was initiated.

Chargebacks on refunded transactions typically occur when:

• The refund and chargeback are processed around the same time.
• The issuing bank has not yet verified or received confirmation of the refund before the dispute is raised.

The final outcome will depend on the issuing bank’s assessment of the transaction and supporting evidence provided.

8. Why did I receive a full refund amount being claimed in a chargeback instead of only the partial amount due?

A chargeback is initiated by the cardholder through their bank, and the bank processes the dispute based on the information provided by the customer rather than the property’s refund policy.

There are several reasons why a full amount may be disputed instead of a partial amount:

• The cardholder has disputed the entire transaction by default.
• The bank initially treats the dispute as a full transaction while investigating.
• The cardholder may be unaware that only a partial refund is applicable under the booking terms and conditions.
• The cardholder may be disputing the entire service or stay, even if partial usage occurred.
• There may be misunderstanding or lack of clarity regarding refund entitlement.

Chargebacks are assessed by the issuing bank, and the final outcome is determined based on evidence provided by both parties.

9. What should I do if a cardholder is claiming a full chargeback amount when only a partial refund is applicable?

If a cardholder has raised a chargeback for the full transaction amount but only a partial refund is valid under the booking terms, the following steps should be taken:

• Review the booking details and confirm the correct refund entitlement under the applicable policy.
• Gather supporting documentation, including:
  • Booking confirmation and terms & conditions
  • Cancellation policy acceptance
  • Payment and transaction records
  • Guest communication history
• Submit clear evidence showing why only a partial refund (or no additional refund) is applicable.

The final decision will be made by the cardholder’s bank based on the evidence provided.

10. What does it mean if I receive a second chargeback after winning the case?

If a subsequent chargeback is received after a case has been won, this means the dispute has been re-presented or escalated through the cardholder’s issuing bank in line with card scheme rules.

In some cases, including scheme-specific escalation processes (particularly with Amex), the dispute may be reviewed again after an initial decision has been made.

11. When does RMS Pay automatically defend a chargeback?

Auto-defence occurs in cases where no action is required from you. This typically includes:

• Chargebacks for transactions that were fully refunded prior to the cardholder filing the dispute.
• Chargebacks with a fraud reason code where liability has shifted, such as 3D Secure transactions (this does not include payments made with digital wallets).
• Chargebacks that are invalid due to technical reasons, such as being submitted outside the allowed timeframe.
• Chargebacks that do not apply to your merchant category code.

12. How should I handle a chargeback for a Virtual Credit Card (VCC) from an OTA?

For Virtual Credit Card (VCC) chargebacks, contact the Online Travel Agent (OTA) directly to resolve the issue, as they manage the original payment and settlement.

Related Articles

• Chargebacks
• Defend Chargeback
• Accept Chargeback
• RMS Pay
• RMS Pay Settlement Report
• 3D Secure (3DS) for Online Payments
• RMS Pay: Frequently Asked Questions