Why Do We Get Chargeback On Closed Merchant Account?

Merchant Services Q&ACategory: Payment ProcessingWhy Do We Get Chargeback On Closed Merchant Account?
Maurya Shubham asked 7 months ago
1 Answers
Prakhar Chandra Staff answered 7 months ago

You may be wondering that why you are still receiving chargebacks when the merchant acquirer has closed your merchant account. The reason why you’re getting chargebacks is because the customers are raising disputes. Now you may ask the question that how the customers are able to raise the dispute even when your merchant account is closed? The answer is simple they are raising disputes because they have a different agreement with the card issuing entity. Depending upon the type of card being issued it can offer terms which allow card holders to raise disputes for upto 365 days. Although in most cases the disputes are usually raised in between 45 days to 180 days

This is the key reason why payment gateway companies hold merchant funds for up to 180 days after the closure of accounts. Sometimes they may only do partial funding after 180 days and may wait for additional 180 days for final settlement.