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Chargeback Handling

Accounting Support

Refund or chargeback?

Some use cases require merchants or service providers to return money to their customers. Depending on who initiates the return and why, this operation is either a refund or a chargeback.

  • Refund: Suppliers refund a received payment – partially or completely – usually as the result of an invoice correction involving cancellations or credits.
  • Chargeback: In the course of a dispute, for example, a customer may reject a debit from their bank account that is based on a direct debit, which produces a chargeback on the supplier's bank account.

To help handle return debits or other chargeback operations, JustOn supports chargebacks with payment entries or chargebacks via payment service provider.

Chargeback Payment Entries

Your business can register payment operations via payment entries. To support return debits or other chargeback operations in this case, JustOn allows to handle dedicated chargeback payment entries.

A chargeback is indicated by the selected Is Chargeback checkbox field on the payment entry. Assigning a chargeback payment entry creates a balance of the type Chargeback. If there is a chargeback fee, JustOn creates an additional balance of the type Chargeback Fee. A chargeback balance offsets an assigned payment balance. Consequently, assigning a chargeback balance to a paid or settled invoice will set the invoice back to the status Open. Mathematically, the sign of the chargeback amount is always the same as the sign of the invoice's grand total.

Info

The dedicated support for chargebacks is available as of JustOn 2.69.

In earlier versions, users were allowed to select the option Force Matching when executing the payment matching or assignment procedure in order to force the payment entry matching without regard to the sign of the payment amount. JustOn 2.69 has removed this option. Instead, users can now explicitly define payment entries as chargebacks.

Automatic Chargeback Detection

When importing CSV payment data, users can select the Import as Chargeback option, which forces all imported payment entries to become chargebacks.

If not set explicitly, JustOn automatically detects and sets chargebacks when matching payments if one of the following conditions is true:

  • At least one of the payment entry fields Original Payment Amount or Chargeback Fee is set, OR
  • The payment entry matches a paid or settled invoice whose invoice balance has the same sign as the payment entry amount.

In addition, the invoice payment method must be either SEPA (if enabled, see Payment Method SEPA), or Direct Debit or Bank Transfer.

Payment Amount Matching

Sometimes, the Reference field of a chargeback payment entry contains ambiguous information, which prevents it from being unequivocally matched with an invoice. In this case, you can use the Payment Matching Fields setting to include the IBAN or Account Number.

Another option is to use the Direct Debit Mandate Reference field of the payment entry. If set, JustOn uses this value for matching invoices with the SEPA Direct Debit mandate reference (which may be stored on the invoice, the account or the payment instrument).

These payment matching approaches may, however, be not clear. This is why JustOn searches the payment balances of all relevant invoices for a matching payment amount to determine the correct invoice.

Chargeback Fees

If required by your accounting processes, JustOn can create balances of the type Chargeback Fee. To this end, at least one of the payment entry fields Original Payment Amount or Chargeback Fee must be set. If only one field is set, JustOn calculates the missing value using the given field and the Payment Amount – based on the formula:

Payment Amount = Original Payment Amount + Chargeback Fee

Foreign Currencies

Generally, JustOn uses the payment entry currency for the Original Payment Amount and Chargeback Fee amounts. If, however, the payment entry has set a Foreign Currency Code (see Payment Matching With Multiple Currencies), then this currency is also applied to the Original Payment Amount and Chargeback Fee amounts. This improves the payment entry matching by payment amount because it does not require amount conversions.

Chargeback via Payment Service

Using the payment page shipped with the JustOn Self-Service Extension, businesses can provide their customers the option to directly pay their invoices. To this end, the JustOn Self-Service Extension can integrate with payment service providers.

Depending on your payment service provider integration, JustOn can handle ordered chargebacks – it directly returns the corresponding payment originally made via the payment page of the JustOn Self-Service Extension.

Doing so

  • Creates a balance of the type Chargeback with the reversed amount of the original payment balance on the invoice,
  • Relates the original payment balance with the chargeback balance,
  • With the payment balance and the chargeback balance offsetting each other, resets the original invoice to the status Open.
Example: Complete chargeback

(1) Original invoice balances invoice is Paid

Type Amount
Invoice 100,00
Payment -100,00

(2) Resulting balances after executing a complete chargeback:

Type Amount Notes
Invoice 100,00
Payment -100,00 unassigned from the invoice
Chargeback 100,00 not assigned to the invoice

The invoice is reset Open with an open amount of 100,00.

Example: Partial chargeback

(1) Original invoice balances invoice is Paid

Type Amount
Invoice 100,00
Payment -100,00

(2) Resulting balances after executing a partial chargeback of 25,00:

Type Amount Notes
Invoice 100,00
Payment -75,00 assigned to the invoice
Payment -25,00 unassigned from the invoice
Chargeback 25,00 not assigned to the invoice

The invoice is reset Open with an open amount of 25,00.