Both chargeback and draft retrieval notifications are part of the normal process of doing business by accepting credit cards for payments around the world. These processes are a way of providing incentive to a merchant to provide quality products, helpful customer service, and timely refunds as appropriate via the threat of forced reversal of funds.
The Chargeback Process
is initiated by a cardholder contacting their card issuer and filing a substantiated complaint regarding one or more debit items on their credit card statement, notifying the card issuer:
- which transactions they believe are fraudulent, and
- whether or not the card was in their possession or lost or stolen.
It is not generated automatically by the card issuer. Chargeback notifications often follow draft retrieval request notifications for the same transaction.
Once the chargeback process is initiated for a given transaction, the issuing bank contacts Toast's credit card processor and places a hold on the funds related to the chargeback, via a direct debit of the merchant's bank account.
Toast processes this chargeback notification and provides the information to the merchant and asks the merchant to provide the documentation to dispute the chargeback. This processing incurs a $15 fee for each notification processed. Each chargeback can be objected to, as long as the merchant has good reasons to dispute it.
For Toast customers, the evidence needed to dispute the chargeback is usually a legible, signed copy of the check. In circumstances where no signed copy exists, a digital copy of the check should be provided. Toast always provides a link to the digital copy of the check with every chargeback notification.
Toast customers have 15 calendar days from the report date* of the notification to dispute the chargeback.
A good summary of the chargeback process can be found here.
The Draft Retrieval Request (also known as a "soft" chargeback),
initiated by the credit card issuer (the cardholder's bank, for example) when they want to contact the merchant to obtain information about a transaction charged to one of its cardholders.
The reasons for retrievals can be various, and may be a result of a customer question or dispute, inaccurate or incomplete transaction information, a processing error or an indication of potential fraud. The credit card issuer will request proof of the transaction authorization.
For Toast customers, this proof is usually a legible, signed copy of the check. In circumstances where no signed copy exists, a digital copy of the check should be provided. Toast always provides a link to the digital copy of the check with every draft retrieval request notification.
Toast customers have 10 calendar days from the report date* of the notification to send evidence of the authorized transaction.
*The report date is the date that Toast's credit card processor receives the notification from the card issuer.