What is a Chargeback?

A chargeback is a reversal of a payment made by a customer using a credit or debit card. It happens when a customer disputes a transaction with their bank, claiming issues like unauthorized charges, fraud, or dissatisfaction with the product or service. 

The bank then investigates the claim and, if found valid, they refund the customer and deducts the amount from the merchant's account.

How Does a Chargeback Work?

• The customer finds a problem with a charge and contacts their bank to dispute it.

• The bank reviews the customer's claim and may temporarily credit the disputed amount back to the customer.

• The merchant is notified of the chargeback and given a chance to provide evidence, such as receipts or proof of delivery, to prove the charge was valid.

• The bank decides whether to uphold the chargeback and repay the customer or reject the claim in favor of the merchant.

Chargebacks are designed to protect customers but can be costly for businesses due to fees and potential loss of revenue.

Managing disputes and preventing chargebacks is an important part of maintaining healthy customer relationships and secure payment systems.