With over 133 million active cards worldwide and an average annual spend of $23,500 per card, it’s no surprise that American Express has strict chargeback rules. For merchants trying to minimize losses and maintain a strong relationship with AMEX, managing these chargebacks is of crucial importance. Learn how AMEX chargebacks work and the best ways to handle them successfully.

AMEX Chargebacks: An Overview

Since American Express is both a card network and card issuer, AMEX chargeback dynamics are fairly unique. According to a Nixon report, AMEX chargebacks occur at a rate of about 0.65% of transactions. This is noticeably lower than the rates of Visa and Mastercard, both of which are maintaining a chargeback rate of approximately 0.75%.

The financial impact of chargebacks is significant across all three card networks. The key difference is that AMEX customers tend to spend more per transaction. As a result, the average chargeback amount for AMEX ($200) is slightly higher than Visa ($180) and Mastercard ($175).

When it comes to disputing AMEX chargebacks, merchants do have a lower rate of success (28%) than with Visa and Mastercard (35% and 33%, respectively). Again, the key reason behind this is American Express’s strict review process.

How the AMEX Chargeback Process Works

With American Express, a customer has 120 days from the date of the transaction to file a chargeback. Once they do, an AMEX agent will review the claim. If the claim is found to be legitimate, they’ll issue the chargeback. They may also send a merchant inquiry asking for additional information about that particular transaction.

Once a chargeback is initiated, the merchant has 20 days to respond to it. Ignoring it isn’t recommended, as this will result in an automatic chargeback and a hit to your reputation. Your options include:

• Accepting the chargeback
• Issuing a refund or credit
• Providing evidence of a previous credit
• Submitting evidence to validate the transaction

Managing AMEX Chargebacks

As far as managing AMEX chargebacks goes, the first thing you should do is review all provided documentation carefully before taking any action. Look at the specific reason code for your chargeback and tailor your response to it. Collect all relevant documentation that could help your case, such as invoices, sales receipts, and shipping records.

With documentation in hand, write a concise but comprehensive letter explaining your case and submit it within the required timeframe. Make sure to keep the communication channels with the cardholder open to potentially resolve the issue outside the chargeback process.

Of course, the best way to manage AMEX chargebacks is to prevent them from happening in the first place. This includes having a clear communication policy, always requesting verification measures, and processing refunds immediately.