|
Generally speaking, the acquiring bank (working on behalf of Square, unless Square is a bank proper, I would presume they are just an ISO) takes all risk on a credit transaction, and then extends that risk back to the ISO, who then extends it back to the customer of the ISO. The author's experience strikes me as naive, (which we all are on our first chargeback) but notably, yes, it is his requirement to have enough money in the account to cover any chargebacks he may receive. Depending on his volume, most ISOs and/or acquiring banks would require a healthy reserve as well, should they come and find his bank account dry after he just charged a bunch of people money and then went running to Mexico. The fact that they contacted him -before- taking money out of his account is striking. The normal process is to deduct the money from your account, notify you, and then give you a period of time to respond. If you respond with sufficient evidence, the chargeback protection service clears it, the money is then re-desposited back to your account. The other party then has one more opportunity to dispute and the chargeback handler may decide that you're not going to provide any more viable of a defense, and simply give up - or may push back again, effectively ending the dispute. If the dispute doesn't end in your favor, the money is taken again. If you drained your bank account in the mean-time, you may find your ability to continue to process cards through that ISO, or that Acquirer has been terminated. The truth is, for many years people have perfected scams on both sides of the card handling process, and these responses have been developed to minimize risk for the companies in the chain. |