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Chargebacks within ACH Payments Processing

March 23rd, 2010

ACH processing allows a business to receive money by directly debiting a consumer or business account directly using the accord number and bank sort code.

The consumer or business is protected from unauthorized debit by having the ability to dispute a payment at their bank for 60 days from the payment. For a period of 60 days during which the authorization of a payment can be disputed or during which they may “revoke authorization”. The consumer should attempt to resolve the matter directly with the supplier but if they are unable to get a response or resolve their issue they may attempt to have the bank return the money. The consumer signs an affidavit and the bank issues a chargeback. The payments processor’s account is debited by the bank and they attempt to obtain the money from the supplying company. If a company fails and large numbers of customers request chargebacks the payments processor can be left with significant losses.

The business can to an extent try to protect itself from customers having buyers remorse and unnecessarily committing “friendly fraud” by having a physically or digitally signed agreement is mandatory for recurring payments and can go some way to defending yourself and having the chargeback reversed by your payments processor.
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