Due to its role as an acquirer, Adyen holds full financial responsibility for incoming chargebacks. In the event of a successful chargeback, the customer is immediately refunded in full by the card scheme via the issuing bank. The card scheme automatically recovers the chargeback amount from Adyen.
However, there are two scenarios in which Adyen is unable to recover the amount:
- Your user has ceased trading with Adyen.
- Your user has ceased trading due to bankruptcy.
In these cases, Adyen remains liable to cover the chargeback to the customer, but is unable to recover the amount from your user. To manage the exposure to credit losses, Adyen may require a deposit from or delay settlements of your users. Adyen also holds these funds to protect your users from settlement uncertainties in case of extreme scenarios, such as the COVID-19 pandemic. By holding the necessary funds, we can consistently maintain the cash outflow without having to block payouts during unforeseen events.
Based on their order fulfillment time, the type of industry they operate in, and their merchant country code (MCC), a certain deposit type is applied to your users:
For users processing low volumes in low-risk industries, Adyen applies a settlement delay to their merchant account instead of requiring a deposit: we hold a higher processing coverage instead of holding a securities coverage.