What Is DPP Payment Representment and How Does It Work?

Payment representment is part of the payment dispute process for merchants. When a cardholder questions a transaction, leading to a chargeback, representment allows the merchant to challenge that dispute. DPP payment representment refers to direct payment processing, involving merchants and their processors in managing these disputes. This mechanism allows businesses to present their case and recover funds lost to disputed transactions.

Understanding Payment Representment

Payment representment is the formal process for a merchant to dispute a chargeback. It allows a business to present evidence proving a transaction’s legitimacy. This process occurs in response to a chargeback, a reversal of funds when a cardholder disputes a transaction with their bank. When a cardholder files a dispute, their issuing bank removes funds from the merchant’s account and returns them, often as a provisional credit.

A chargeback bypasses the merchant’s typical return or refund policies, as the cardholder asks their bank to intervene. This action can be triggered by reasons like unauthorized transactions, services not rendered, or products not received as described. Representment is the merchant’s opportunity to present their case and evidence to the issuing bank. It attempts to reverse the chargeback and reclaim disputed funds. This mechanism helps merchants recover revenue lost to invalid or fraudulent disputes.

Navigating the Representment Process

The representment process begins after a merchant receives a chargeback notification from their acquiring bank or payment processor. This notification includes details about the disputed transaction and a reason code. Understanding this code indicates why the cardholder initiated the chargeback and guides the evidence needed. Merchants must decide whether to accept or dispute the chargeback through representment within a timeframe, which can be as short as 30 days.

Gathering Evidence

Gathering compelling evidence is central to a successful representment case. This evidence must directly address the chargeback reason and prove the original transaction’s legitimacy. For instance, if a cardholder claims non-receipt of goods, proof of delivery with tracking information or a signed receipt is crucial. Other examples of compelling evidence include:
Transaction records with dates and timestamps
Proof of address verification (AVS) and card verification value (CVV) checks
Communication logs with the customer showing agreement or satisfaction
For digital goods or services, IP addresses, usage logs, or screenshots of product descriptions and terms of service acceptance

Once evidence is compiled, the merchant prepares a representment letter, also known as a rebuttal letter. This letter summarizes the merchant’s case and explains how the accompanying evidence refutes the cardholder’s claim. It should detail the transaction and relevant policies. The complete representment package, including the letter and all supporting documents, is then submitted to the merchant’s acquiring bank or payment processor.

Adherence to deadlines is important throughout this submission phase. Failure to submit the representment package within the specified timeframe is often interpreted as an acceptance of the chargeback. Upon receipt, the acquiring bank reviews the package and forwards it to the cardholder’s issuing bank via the card network. The issuing bank then evaluates the evidence presented by the merchant against the cardholder’s claim to make a decision on the dispute.

Post-Representment Outcomes

After a merchant submits a representment package, the issuing bank evaluates the evidence to determine the dispute’s outcome. Several possible conclusions exist, each with distinct implications for the merchant. The primary goal of representment is to have the chargeback reversed, meaning the merchant wins the dispute. If the issuing bank rules in favor of the merchant, the provided evidence successfully proved the charge’s legitimacy. In this positive outcome, the chargeback is reversed, and funds initially debited from the merchant’s account are returned.

This reversal restores the transaction’s original status, allowing the merchant to retain revenue from the sale. While the original chargeback fee may not be refunded, recovering the transaction amount is a significant win. Conversely, if the issuing bank upholds the chargeback, the merchant’s evidence was not compelling enough to reverse the cardholder’s dispute. In this scenario, the cardholder retains the disputed funds, and the merchant incurs the loss of the transaction amount, along with any associated chargeback fees. This decision can be final for many disputes, especially if the merchant chooses not to pursue further action.

Accepting this outcome means the case is closed with the chargeback standing. In some instances, even after a merchant wins a representment, the cardholder or issuing bank may dispute the outcome, leading to a “second chargeback” or pre-arbitration phase. This stage allows for a re-evaluation of the dispute, often when new evidence is presented by the cardholder.

Merchants then face a choice: accept the loss and the second chargeback, or escalate the dispute to arbitration. Arbitration involves the card network, such as Visa or Mastercard, stepping in as a neutral third party to review all evidence and make a binding final decision. While arbitration can lead to a reversal in the merchant’s favor, it typically involves significant fees for the losing party, which can range from hundreds of dollars.