This documentation was authored in part by secure AI tools.  Please review this content carefully before integrating it with other processes.

This instruction is intended for Merchants.

Overview

A chargeback occurs when a customer disputes a payment with their bank, claiming the transaction was unauthorized or invalid. When this happens, the funds are withdrawn from your (the Merchant’s) account and the invoice balance becomes outstanding again.

How Chargebacks Are Processed

• Chargebacks are initiated by the customer through their bank.
• They are typically processed in daily batches by the payment processor.
• Although a chargeback may occur up to 90 days after the original transaction, it will appear in Q360 on the day it is processed.
• Chargebacks are applied after settlement, meaning the funds may have already been deposited into your bank before being withdrawn.

Chargeback Notifications

When a chargeback occurs:

• You will receive an email notification with:
  • • Transaction ID
    • Merchant account details
    • Chargeback amount

   

• The chargeback will also appear in the Payment Processor Transactions report (Q0396).

Identifying Chargebacks in Q360

To locate a chargeback:

1. Run Report Q0396 (Payment Processor Transactions).
2. Filter by:
   • Transaction date (e.g., today’s date)
   • Merchant Transaction ID (from the email notification)
3. Note:
   • Chargebacks appear as separate transactions with unique IDs.
   • The amount shown includes the original transaction plus any associated fees.

Financial Impact

• The chargeback amount is automatically deducted from your bank deposits.
• If there are insufficient funds:
  • • The balance may roll into the next day, or
    • The processor may withdraw funds based on your agreement.

   

• The related invoice becomes unpaid and outstanding again.

How to Handle a Chargeback

Step 1: Locate the Invoice

• Use the report to identify the associated invoice number.
• Open the invoice directly from the report.

Step 2: Reverse the Original Payment (Internal Only)

⚠️ Important: Do not use Refund or Void options.  Doing so will result in payment being returned twice – once via the ‘void’ and once via the ‘chargeback’ event.  Furthermore, chargeback and voids produce additional fees per event (example $25 per chargeback/fee) based on your agreement, therefore doubling fees for the event”

Instead:

1. Go to the AR Journal tab on the invoice.
2. Identify the original payment transaction.
3. Use the Reverse Entry function.
4. Set the reversal date to match the chargeback date.

Result:

• The original payment and fees are reversed.
• The transaction amount on the invoice is restored as outstanding.
• No additional transactions are sent to the payment processor.

Chargeback vs. Other Transaction Types

Disputing a Chargeback

You have two options:

1. Accept the Chargeback
   • The invoice remains unpaid.
   • You may request payment using another method (e.g., check, ACH).
2. Dispute the Chargeback
   • If successful:
     • • At the time of a successful dispute resolution perform a “Reverse Entry” of the “REVERSAL ENTRY” that was created for the chargeback to return things to “the way they were”
       • In case of a successful dispute resolution the fee associated with the chargeback is also returned.

      

   • During the dispute:
     • Decide whether to leave the invoice open or adjust it temporarily based on your internal policy.

Fees

• Chargebacks may include processing fees.
• If a dispute is successful:
  • Fees are typically returned along with the transaction amount.

Best Practices

• Always use Reverse Entry for chargebacks—never Refund or Void.
• Reconcile chargebacks daily using Report Q0396.
• Establish an internal policy for handling disputed invoices.
• Communicate with customers promptly to recover payment when appropriate.