Differences Between a Chargeback & A Retrieval Request

I want to keep my chargeback rates as low as possible. One way is to prevent a retrieval request from escalating to a chargeback. This is why understanding these differences matters.

I’ll compare their differences (and chargeback alerts). From there, I’ll explain what each is for context.

Let’s start with a comparison.

Key Takeaways

• Retrieval requests and chargeback alerts happen before chargebacks.
• Not all card networks perform retrieval requests.
• Fees and response times differ by card network and alert enrollment.
• Chargebacks impact dispute rates and incur fees.
• Retrieval requests and chargeback alerts both require evidence submission.

What if you didn’t have to deal with a retrieval request or chargeback? Chargeback alerts let you stop both in the pre-dispute stage.

Learn how.

Chargebacks vs. Retrieval Requests vs. Chargeback Alerts

Chargebacks reverse disputed transactions. Happening in the post-dispute stage. Retrieval requests, initiated by issuers, gather transaction details in the pre-chargeback stage. Chargeback alerts notify merchants early. Allowing for refunds or responses in the pre-dispute stage.

Here’s a brief comparison:

These figures aren’t fixed. Fees, for instance, vary by processor or provider. I compare the costs by gateway, here.

Chargeback alerts can cost as little as $15 each. I’ll dive into these nuances in a bit.

Let’s dive into each of these points.

1. Purpose

Chargebacks exist to protect customers, ensuring they can recover money from merchants acting in bad faith. Or if their card information is stolen. While effective, sometimes customers misuse these rights, filing disputes to get free goods (chargeback fraud).

These have kind of served their purpose. In 2023, more than 238 million chargebacks hit sellers globally.

A retrieval request serves a similar purpose but without instantly penalizing the merchant. It offers the seller a chance to prove their case before it counts toward their chargeback rate.

Chargeback alerts give sellers a chance to resolve issues with customers before they escalate to retrieval requests or chargebacks. Think of it as a chargeback prevention tool. Using all 3 alerts can prevent up to 91% of chargebacks.

When I refer to “all 3 alerts,” I mean CDRN, RDR, and Ethoca Alerts. They’re all different enrollments. We have a separate piece that compares them.

2. Cost & Impact

Chargebacks bring several costs:

• Chargeback fees: $10 – $100 per chargeback
• Chargeback rate contribution: High rates can damage a business
• Reputation damage: Affects relationships with payment processors
• Resource drain: Staff are diverted to handle disputes

Chargeback fees compound on top of lost product value, processing fees, and staffing costs. Every dollar lost in chargebacks costs an estimated $2.40 [1]. Moreover. Every dollar lost in fraud costs more than $3.00.

These fees aren’t based on the disputed product’s value. For example, a $10 chargeback fee applies even if the product only costs $8.

With Stripe, high chargeback rates can trigger rolling reserves, where a portion of purchases covers future chargebacks and refunds. Here’s more information on reserves.

Exceeding a 0.90% dispute rate places you on a chargeback monitoring program, such as the Visa Dispute Monitoring Program. These add fees per chargeback.

Extended program stays can result in tens of thousands of dollars in fines. And after 12 months, Visa processing could be revoked. Or worse, they could place you on the MATCH list. It’s a blacklist. Meaning you can only use payment processors that accept high-risk vendors.

Such gateways come with increased fees and scrutiny.

I highly recommend reading a guide we have on chargeback rates. It’ll tell you how serious this is.

Retrieval request fees vary by acquirer. For example, Stripe charges $15 for retrievals and chargebacks.

But. There’s no “retrieval rate.” Meaning, you won’t face penalties if you have too many retrieval requests. 

Chargeback alerts have per-alert fees.

CDRN and Ethoca Alerts cost up to $40 each.

Rapid Dispute Resolution fees vary by merchant category code, ranging from $15 to $40. High-chargeback merchants or those with high-margin products (e.g., digital goods) benefit from these alerts. Preventing chargebacks is better than facing the above consequences.

Right?

Many resellers (like us) offer these alerts at volume pricing. Saving you money in the long run.

3. Stage in the Dispute Process: When They Occur

Chargeback alerts happen before the chargeback process. Hence, why they’re “alerts.” Think of them as early warning systems that let you know when an earthquake is brewing. But you’d actually have a chance to stop it.

Retrieval requests also take place before an actual chargeback. The cardholder has questions about their purchase, but hasn’t begun a formal dispute.

If the retrieval request fails, or the card network doesn’t use retrieval requests, you’ll face a chargeback.

I implore you to read our guide on the chargeback process. It’ll help you understand what all this means.

I’ll explain each in more detail soon.

4. Opportunity

Chargebacks are a nightmare, but they give you a chance to improve your standard operating procedures. For instance, if fraud occurs due to a flaw in your system, you can strengthen your security.

Or, if you accidentally sent the customer the wrong item, you’ll know to improve logistics.

Retrieval requests offer similar chances without the chargeback consequences.

Chargeback alerts give you both benefits while minimizing resource drain.

5. Time to Respond

American Express and Discover give merchants 20 days to respond to retrieval requests. Failure to do this will result in an irreversible chargeback.

Customers have up to 120 days to file chargebacks. If they’re filing a Good Faith investigation through Discover, they’ll have up to 2 years. Good Faith investigations address fraud undetected for extended periods.

Chargeback response times vary by provider and process stage. Visa disputes, for example, allow 20 days. Mastercard disputes allow 45 days.

CDRN alerts give merchants 72 hours to respond. Ethoca alerts allow about 48 hours. This short window saves months of chargeback processing if handled promptly.

6. Card Network Policies

Visa doesn’t use retrieval requests, and Mastercard only uses them for Maestro cards. American Express and Discover are the only “major” brands that use them. But Discover calls them “Inquiries.”

Whether a retrieval request happens will vary by case.

Say you don’t respond within AmEx’s 20-day Inquiry limit. You’ll automatically get a chargeback.

The same goes for these situations:

• You’re a part of the Fraud Full Recourse, Immediate Chargeback, or Partial Programs
  • These are different AmEx chargeback reason codes.
• AmEx believes the customer’s evidence is enough to support their claim.

With Discover, you can’t dispute chargebacks or receive retrieval requests for certain reason codes, including:

• AA: Does Not Recognize
• UA01: Fraud: Card Present Transaction
• UA02: Fraud: Card Not Present Transaction
• UA05: Fraud: Chip Card Counterfeit Transaction
• UA06: Fraud: Chip and PIN Transaction

Exceeding Discover’s time limits also results in irreversible chargebacks.

Chargebacks for AmEx and Discover aren’t reversible if the issuer sides with the customer. Though, you can appeal the case.

Retrieval requests essentially act as the chargeback process, since you’re submitting evidence.

There’s no specific policy process for chargeback alerts.

7. Who Initiated It

Technically, cardholders initiate inquiries, chargebacks, and chargeback alerts. As they’re customer rights protection mechanisms.

Unless…

You run into a situation like a late presentment chargeback. This dispute happens when the issuer files a chargeback without the customer’s request.

8. How to Respond as a Merchant

1. Retrieval Requests

When a retrieval request is issued, merchants should respond quickly by providing evidence that verifies the transaction’s legitimacy. Examples include an invoice, order confirmation, or delivery tracking information.

Prompt, accurate documentation prevents disputes from escalating. Failure to respond in time escalates the request to an irreversible chargeback.

2. Chargebacks

When facing a chargeback, merchants can accept the chargeback, which means the charge is reversed without dispute. Or, sellers can enter the representment process to contest it.

In the representment process, merchants compile evidence to challenge the chargeback. They’d work closely with their acquirer, who submits the response to the card issuer on the merchant's behalf.

The acquirer does not make any decisions regarding whether the chargeback stands.

Anyway:

Common evidence includes:

• Transaction records
• Customer communications
• Proof of delivery

If the acquirer approves of the evidence, they’ll hand it off to the issuer. From there, the issuer will review the evidence to determine whether they’ll reverse the chargeback..

3. Chargeback Alerts

Chargeback alerts allow merchants to act during the pre-dispute stage to prevent a formal chargeback.

With CDRN and Ethoca alerts, merchants receive real-time alerts when a cardholder disputes a charge. Sellers must respond within a set timeframe. They’d do so by issuing a refund or disputing the alert with evidence to resolve it.

In the case of RDR alerts, merchants can set up filters for certain types of transactions. If a flagged transaction meets the filter criteria, it automatically triggers a refund, stopping the chargeback process.

Now you know the differences among the 3.

Let’s break down what each of these different elements of chargebacks are.

Beginning with retrieval requests.

What is a Retrieval Request?

A retrieval request happens when cardholders or banks need clarification about a charge. Merchants must provide supporting documents to verify the transaction's legitimacy. This process helps prevent disputes from becoming chargebacks.

Many processors and issuers use "disputes" and "chargebacks" interchangeably. Generally, a “dispute” implies a complaint about an unfair transaction. Meanwhile, a “chargeback” is a forced reversal of funds.

We do a deeper dive in the differences here.

Let’s see how these work.

Summary: The issuer requests more information on a purchase.

How Do Retrieval Requests Work?

If a customer questions a transaction, the issuer may contact the acquirer. Who then reaches out to the merchant. The merchant submits details like an invoice, order confirmation, or tracking info. Based on this, the issuer decides to end the dispute or proceed with a chargeback.

Issuers vary on whether they use retrieval requests (e.g., Visa doesn’t). Retrieval requests can occur for the same reasons as chargebacks, such as friendly fraud, true fraud, or merchant error.

I’ll provide context in a bit.

For some fraud reason codes, issuers skip retrievals and issue chargebacks directly. Especially if the merchant has a high chargeback rate.

Let’s clarify what chargebacks are.

What is a Chargeback?

A chargeback is when a payment card transaction is reversed after a customer disputes it. This protection allows cardholders to recover funds from unauthorized or incorrect charges on credit or debit cards.

This isn’t a refund, though.

We cover the differences between refunds and chargebacks in a separate piece. In short, merchants have control over the refund process. Issuers control the chargeback process.

Here are some important (but brief) tidbits regarding chargebacks:

• Average rate across industries: 0.60%
• Duration: 75–120 days (average)
• Average merchant win rate: 30%

Chargeback rates vary by industry. For instance, travel and education generally have higher rates than restaurants.

How long they’ll take varies by the case’s complexity and issuer.

And the average win rate will vary by millions of factors (not literally). Most of the time, customers will win unless you have concrete evidence that’ll prove the purchase was legitimate.

This win rate will also fluctuate depending on the chargeback type.

You’ll need to read each of the above linked guides for more context. There’s too much to include in this guide.

Key players in this process include:

• The cardholder
• Issuing bank (customer’s bank)
• Merchant
• Acquiring bank (your payment processor)
• Credit card network

The issuer assigns a reason code and may issue a provisional refund. Response strategies and evidence requirements vary based on the reason code and card used.

And your response to each code will vary. For instance, the evidence you’d provide.

Once the reason codes are assigned, the chargeback process will follow. Let’s see what that looks like.

Summary: A forced “refund.”

How Do Chargebacks Work?

Here’s the general flow of chargebacks:

1. Dispute initiation: Cardholder contacts the issuing bank.
2. Provisional refund: Issuing bank temporarily credits the cardholder.
3. Reason code: Bank assigns a reason code based on the dispute.
4. Merchant response: Merchant chooses to accept or contest the chargeback.
5. Evidence gathering: Seller collects documentation.
6. Submission: Evidence is sent to the acquiring bank.
7. Bank review: Issuing bank reviews evidence to make a decision.

In some cases, the merchant (or cardholder) can appeal to the bank’s decision. This leads to pre-arbitration. A stage when both parties have a final chance to find a solution to the issue. For instance, the business could issue a refund.

If neither party comes up with a solution, this escalates to arbitration. When the card network (e.g., Visa) makes a final, un-appeal(able) decision.

We have more information on the chargeback process in this guide.

Where do retrieval requests play into this process?

First off, you’ll have the “pre-dispute” phase. This is when the customer files a complaint with their bank or issuer, but it hasn’t escalated to a chargeback. If you have chargeback alerts, you’ll have a chance to nip this issue here.

Some card brands will support retrieval requests, which comes after pre-disputes. This stage requests information from merchants, but hasn’t dealt a chargeback.

Regarding chargeback rates.

Pre-disputes, retrieval requests and won disputes don’t count toward chargeback rates. Lost disputes do. Pre-disputes and retrieval requests also don’t come with chargeback fees. Almost all chargebacks (whether you win them) include this fee.

This seems unfair to merchants. Why do chargebacks happen?

Common Causes of Chargebacks

All chargebacks fall under friendly fraud, true fraud, and merchant error.

1. Friendly Fraud

Friendly fraud occurs when cardholders dispute legitimate transactions. Often mistakenly or even to bypass a refund.

This type of chargeback makes up roughly 60 – 80% of all disputes.

For instance, a cardholder might purchase an item online and, upon changing their mind, file a chargeback instead of contacting the merchant for a refund.

Many folks will confuse this with “chargeback fraud,” which is illegal and can be tried in court under grand theft. But what’s the difference?

Intent.

If a customer is purposefully trying to “steal” money from you, then that’s chargeback fraud. If they don’t know they’re committing fraud, then it’s “friendly” fraud. It’s difficult to prove one’s intent in court, though.

We do a more thorough comparison of these types of fraud in a separate piece.

Anyway. Other causes for friendly fraud chargebacks include:

• Unauthorized purchase: Claims someone else made the transaction.
• Buyer’s remorse: Files a chargeback instead of contacting the merchant.
• Family fraud: Family members use the card without knowledge.

2. True Fraud

True fraud, accounting for 1% of chargebacks, occurs when a fraudulent party uses stolen credit card information to make unauthorized purchases.

For example, a fraudster might steal a cardholder’s details and use them to buy items. Leaving the cardholder to notice the charge later and dispute it.

Other causes for true fraud chargebacks include:

• Account takeover: Unauthorized charges on a compromised account.
• Lost/stolen card use: Unauthorized charges from lost/stolen cards.

3. Merchant Error

Merchant error, responsible for up to 40% of chargebacks, arises from mistakes in billing, processing, or fulfillment.

For example, a merchant might accidentally double-charge a customer, leading to a dispute. These errors are preventable through attention to detail and strong communication with customers.

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Other causes for merchant error chargebacks include:

• Duplicate charge: Customer is charged multiple times.
• Incorrect amount charged: Different from agreed-upon price.
• Failure to cancel subscription: Recurring charge after attempting to cancel.
• Unclear billing descriptor: Doesn’t recognize the descriptor on their bank statement.
• Product not received: They never received the purchased item.

You’re probably sick of dealing with chargebacks. This “sickness” leads us to chargeback alerts.

What is a Chargeback Alert?

A chargeback alert notifies merchants instantly when cardholders dispute transactions. Allowing time for refund processing before formal chargebacks occur. This real-time warning system helps prevent disputes and reduces processing costs.

There are 3 main types of chargeback alert services:

1. CDRN (Chargeback Dispute Resolution Network)
2. Ethoca Alerts: Mastercard’s service also provides real-time alerts.
3. RDR (Rapid Dispute Resolution): An automated refund solution with Visa, based on custom rules.

CDRN, offered through Verifi (now part of Visa), connects directly with issuers. Providing alerts that allow merchants up to 72 hours to refund transactions before a chargeback is initiated. This enrollment supports cards from most brands for US sellers.

Ethoca Alerts, offered by Mastercard, also provides real-time alerts by connecting issuers and merchants. It mostly supports Mastercard transactions, but has limited support for other brands. Unlike CDRN, it works globally.

RDR, also part of Visa, automates dispute resolutions by setting custom rules for automatic refunds on flagged transactions. This ensures quick responses but may limit the merchant’s control in certain cases. It works internationally, but only for Visa transactions.

CDRN and Ethoca require merchants to manually refund purchases. RDR doesn’t. Each alert provider also covers different card networks. You’ll need to review our comparison of the 3 to know which to choose.

The average cost of a chargeback alert is typically around $40 per alert. Though this varies based on provider, transaction volume, and industry. RDR will charge you rates based on your merchant category code (MCC).

The higher the risk of your industry, the more you’ll pay.

Just like you’ll pay more if you get these alerts through Ethoca and/or Verifi. You’ll typically get them cheaper through certified resellers (like us). Because they — we — typically offer volume pricing. Meaning, you pay less the more alerts you receive.

And that’s about it for this guide.

Summary: Gives merchants a chance to refund purchases before they escalate to chargebacks.

Conclusion

Chargebacks are brutal and can cost you your business if you have too many of them. Retrieval requests allow customers their rights to fair transactions without heavily penalizing merchants. Chargeback alerts prevent both from happening.

If you’re tired of wasting resources on both processes, consider chargeback alerts. We offer them at volume pricing to help you save even more money.

Try them out.

Sources

1. [1] How much is a chargeback fee? Verifi.