When it comes to the chargebacks, most people think about the Visas and Mastercards. After all, they account for a large volume of transactions executed through credit/debit cards. American Express accounts for only 3% of these transactions but the card is extensively used for bigger purchases. Merchants agree that AMEX cards are associated with high interchange fees, which is the reason why most small retailers do not accept American Express cards. But these cards are quite popular among people shopping for luxury items. That’s why more and more merchants are now accepting American Express.
If you are also planning to add this card to your accepted payment methods, you must familiarize yourself with its dispute process. AMEX has different policies for its chargebacks and disputes than Visa and Mastercards. It’s important for merchants to understand the AMEX chargeback process, especially if they are not familiar with this card.
How Does Chargeback System Work with AMEX Cards?
What sets American Express apart from Visa and Mastercard is the fact that AMEX is the issuing bank and not just the card provider. Though the company has started allowing third parties to start issuing AMEX cards, it’s mostly American Express that acts as the issuer. This fact simplifies the dispute and chargeback process. Now, it’s easier for AMEX to record all the details of every transaction.
The cardholder gets 120 days following the day of the transaction to start a dispute, although this period could be extended for some cases. Note that the cardholder is allowed only one dispute per transaction, which means they cannot file a dispute over and over again. Besides, the parties are given only one chance to submit the proof. If the cardholder wants to submit additional information, they may have to file a new dispute. Now, what happens when a cardholder files a dispute with American Express?
The company either issues a chargeback immediately (given that the cardholder submits sufficient evidence) or an inquiry for further clarification is sent to the seller. This happens when the evidence submitted by the cardholder does not justify their case or is insufficient. In short, here’s how American Express responds to the disputes:
- The disputes are marked invalid
- The chargeback is issued immediately
- An inquiry is sent to the seller
However, American Express mostly resolves these disputes by issuing a chargeback.
What Options Do the Merchant Have?
The merchant has to respond to the chargeback within 20 days. If they do not respond within this period, the chargeback will be considered valid with no further clarifications and evidence needed from any party. Here’s what the merchants can do:
- Give no response
- Accept and validate the chargeback
- Show the proof of issued refund
- Prove that the chargeback is valid
If the merchant responds within 20 days to the chargeback with sufficient evidence, the case will be dismissed instantly with the chargeback getting reversed. So, it is clear that merchants are given a fair amount of time to review and process the chargeback requests and gather the necessary evidence for the reversal. However, the major issue with the Amex dispute system is that some merchants are not even informed about the cardholders placing a chargeback request. This is especially the case with high-risk merchants. In a majority of cases, the chargeback request is approved immediately and the amount is credited to the cardholder’s account.
How to Prevent American Express Chargebacks?
Fortunately, American Express has taken many measures to prevent chargebacks in recent years. Being the issuer of the card as well as the payment network, the company keeps detailed records of each transaction and helps customers resolve their unauthorized disputes easily. In addition, the company has also taken efforts in informing merchants about the chargeback possibilities and what can be done to prevent such disputes. Here’s what the company advice:
- Share your return and refund policy with each customer
- Comply with the AMEX authorization and safety protocols to ensure protection from fraud chargebacks
- Maintain records for each transaction for a year
Besides, merchants should analyze the reasons that lead to chargebacks and take preventive measures to avoid disputes in the future. For some businesses, it is the extremely strict refund policies that make it super challenging for customers to return the products and request a refund. For others, it is a misleading advertisement copy. Whatever the issue is, it is the merchant’s responsibility to address the problem to avoid such chargebacks in the future. Not only will it help reduce the number of chargebacks you encounter, but addressing the root cause can strengthen your business and make it look more credible to your customers.
In some cases, the merchant does not bother to request a chargeback reversal. They either don’t respond to the chargeback at all or validate it. When a chargeback is filed, the result is mostly in the favor of the cardholder. Besides, if a large number of chargebacks are filed against a merchant, there is a good chance American Express will put the business into its monitoring program. Amex will not give these merchants a chance to fight the case, and issue an immediate chargeback to the cardholder.
The program also means that businesses with multiple chargeback issues will end up losing their privilege of requesting a reversal. The best thing the merchants can do is issue a refund to the customer and show the evidence of the same to American Express. Accurate and timely responses can reverse the chargeback and help you get your money returned, however, lack of proper evidence and not being able to respond in time will make the chargebacks stand.
Most Amex chargeback cases are addressed and resolved in a month, but some complicated cases can take longer. As mentioned earlier, when a chargeback is filed, there is a good chance the outcome will favor the cardholder and not the merchant. Whatever the outcome is, it is important that the merchant responds to the chargeback and clears the refund if it’s a valid dispute if possible.