Requesting Chargebacks on Money Transfers

Getting from Point A to Point B. It sounds so simple in abstract terms, but when it comes to moving funds it is anything but. Money transfer is a complicated business in its own right and when you enable transactions with credit or debit cards it adds the problem of chargebacks to the mix. The exact impact in terms of payment disputes depends on the precise business model of the service and the fine print.

Money transfer is a complicated business in its own right and when you enable transactions with credit or debit cards it adds the problem of chargebacks to the mix

The amount of money lost to chargebacks is likely sizeable since money transfers are a significant element of the global economy. Just the digital remittances market alone is expected to reach $42.5 billion by 2028, according to ResearchAndMarkets.com.

Transfers that are cash advances

Well, what can you do when a money transfer goes wrong? 

Payments through money transfer services like Wise, Xoom (owned by PayPal) and Western Union can usually be cancelled if the recipient has yet to receive the funds. However, the transaction typically cannot be reversed after the payment is received on the other end.

cash advances chargebacks

This is because transfers initiated by credit card under Merchant Category Codes (MCCs) 4829 or 6012 (wire or money order) are usually considered by issuers as cash advances. This means they do not benefit from chargeback protection for disputes with payees on the other end of the transaction if the money is withdrawn as cash. In addition, interest is levied upon the transaction sum from the day the transaction is completed until the sum is paid off. 

In the case of Wise, the company makes clear that chargebacks for uploading funds to a Wise account with a debit card are permitted for unrecognized transactions. Xoom says it is liable for fraudulent transactions involving customers’ credit and debit cards as well.

With the new money transfer service Novi by Facebook, it is possible to file a chargeback at least according to information available on their website. The site, however, says it is only to be used for person-to-person (P2P) transfers and that any transfers made for goods and/or services are done at the user’s own risk.

Novi is unique

Novi is also unusual because it is built as a digital wallet that utilizes the cryptocurrency stablecoin USDP Justt

Novi is also unusual because it is built as a digital wallet that utilizes the cryptocurrency stablecoin USDP. Stablecoins are cryptocurrencies that are pegged to a fiat currency or another asset. USDP is a stablecoin pegged in value to the U.S. dollar at a ratio of 1:1. Under Visa rules, cryptocurrency purchases – like money transfers – are considered cash advances. Should Visa rules on cryptocurrency purchases change, it is unclear how Novi would be classified.

The author of this article has requested additional information from Novi regarding how it handles chargebacks and it’s MCC categorization. When any additional information is received, it will be added to this blog article.

Wise functioning as a financial institution

Wise also has multi-currency electronic money accounts, meaning the service is also an issuer of debit cards. When using these debit cards to purchase products, the cardholder can request a service-related chargeback for transactions that are not person-to-person (P2P) money transfers.

This puts Wise in the unusual position of both issuing chargebacks on behalf of customers but also receiving chargebacks as a merchant of record.

Justt fighting chargebacks

Whatever the business model, Justt customizes its chargeback mitigation solution to the specific needs of each customer. Save 1-2 percent of your revenue by letting a crew of tech and chargebacks experts take your payment disputes off your hands. You’ll barely feel we’re there, as your success rate fighting chargebacks jumps.

Contact us if you’re interested in learning more.

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    Chargebacks per month

    • Under $5,000
    • Under $50,000
    • Under $100,000
    • Over $100,000
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