What Are Chargebacks?

A chargeback occurs when a customer disputes a charge with their card issuer or bank, leading to the reversal of the payment. Common reasons include fraud, merchandise not received, insufficient account balance, incorrect bank account numbers, or dissatisfaction with the product or service quality.

Communication and Steps for Handling Chargebacks

When a chargeback occurs, Zomentum will promptly inform you of the transaction failure. Here’s how Zomentum handles chargebacks in QuickBooks Online (QBO) - there are two possible scenarios depending on whether the amount has been paid out to you or not:

Amount Paid Out by Zomentum Payments

If the chargeback amount has been settled by the payment processor and paid out, follow these steps:

  1. Payment Disassociation: Initially created payments associated with an invoice in QBO must be disassociated to mark the invoice as open for recollection. This reverts the invoice to an open status in Zomentum Payments, allowing for re-collection. You need to do this yourself as it cannot be done automatically.
  2. Recovery of Funds: Zomentum Payments withholds subsequent payouts to recover the chargeback amount that was already disbursed. Payouts resume once the amount is fully recovered.
  3. Refund Receipt: For the disassociated payment, Zomentum Payments automatically generates a refund receipt for the same amount, which is attached to the your next deposit.

Amount Not Paid Out by Zomentum Payments

If the chargeback amount was settled but not paid out:

  1. Void Payment: Zomentum Payments automatically voids the payment in QBO automatically, marking the invoice as open in both the accounting platform and Zomentum Payments.
  2. Recovery of Funds: Zomentum withholds subsequent payouts to recover the amount disbursed.

You should discuss any bookkeeping with your accountant and take their advice where appropriate. Zomentum can neither support nor comment on bookkeeping practices.

For ACH and BACS Direct Debit Payments

If the payment method was ACH or BACS Direct Debit, and the reason code matches specific criteria, the saved payment method against which the chargeback occurred is removed:

  • ACH Reason Codes:
    • R02 (Account closed)
    • R03 (No Account/Unable to Locate Account)
    • R04 (Invalid account number)
    • R12 (Branch sold to another DFI)
    • R13 (Invalid ACH routing number)
    • R15 (Beneficiary or account holder deceased)
    • R20 (Non-transaction account)
  • BACS Direct Debit Reason Codes:
    • 3 (Instruction transferred to another bank/building society)
    • 5 (No account)
    • 6 (No Direct Debit Instruction)
    • B (Account closed)
    • C (Account/Instruction transferred to a different branch)
    • F (Invalid account type)
    • L (Incorrect payer's account details)
    • O (Invalid Reference).

If the payment method was ACH, and the reason code is R29 (Corporate customer advises not authorized), then the saved payment method will not be removed but you must ensure your business customers instruct their bank to add Adyen's ACH Company ID 8263863381 to the list of entities that are allowed to debit or credit their business account.

Partner Communication

Partners receive a detailed email explaining the reason for the chargeback and necessary actions. It is advised to inform end clients to update their payment methods accordingly.