This article will explain Net Settlement of Chargebacks with AndDone.
How are chargebacks initiated?
In the context of AndDone, chargebacks are typically triggered by two main issues:
- Insufficient funds - commonly associated with ACH and categorized as a chargeback. Insufficient funds occur and trigger a chargeback when a shopper attempts to complete a transaction without having enough balance to cover the the payment.
- Inaccuracies in bank account information - errors in bank account information such as mistakes in account number, incorrect routing numbers, or outdated details that no longer reflect current banking records will trigger a chargeback event.
- Shopper disputes stemming from unrecognized Sub-Merchant statement descriptors - statement descriptors can be modified in the processor settings. Shopper disputes, while rarer than the other reasons, can occur but can be minimized by including a clear statement descriptor (click here to learn how to modify statement descriptors).
What do chargebacks look like without Net Settlement billing or Invoiced billing?
When chargebacks occur, funds are returned through the NACHA network to the originating financial institution. After the payment has returned, or "charged back," AndDone notifies the Sub-Merchant and sends a payment link to recover these funds. In order to optimize the chargeback process, we have introduced Billing, either by Net Settlement or Invoicing.
What does Net Settlement of chargebacks mean in the context of AndDone?
Net Settlement refers to the method of settling funds between AndDone and Sub-Merchants for amounts owed to AndDone. As transactions process through payment networks, they settle and create a balance of funds that will be transferred to the Sub-Merchant's bank account. During the course of accepting payments, it likely that payments will return for reasons such as insufficient funds or incorrect account information. As payments return, it is the responsibility of the Sub-Merchant to return funds to AndDone, LLC - this is where net settlement becomes essential.
When the Net Settlement of chargebacks occur, the platform (AndDone) identifies transactions that have returned, these amounts are owed to AndDone and withheld against future payouts. This is done programmatically and requires no effort from the Sub-Merchant. This Net Settlement service is supported by daily reporting, including the Daily Settlement Report and Daily Chargeback Report. The Daily Settlement Report includes a line-item for "transferred funds," which is the total amount that will be offset from the payable amount. Chargeback reporting is also available to help you understand exactly what is in the included in the transferred funds amount which is withheld from a payout.
If you need assistance or have further questions, please contact our support team.