What is a Chargeback?

A chargeback occurs when a customer disputes a credit card sale resulting in a reversal of a credit-card transaction. The outcome is most often a financial liability to the merchant -- in other words, you lose money.

The Chargeback Process

1. Customer (cardholder) disputes the transaction then contacts card issuer with disputed information.

2. Card issuer reviews eligibility of transaction for chargeback.

3. If eligible, the card issuer subtracts the transaction dollar amount from the cardholder’s credit card account. The cardholder receives a credit and is no longer financially responsible for the dollar amount of the transaction.

4. The card issuer debits the merchant bank for the dollar amount of the transaction.

5. The merchant bank will, most often, deduct the transaction dollar amount from the merchant’s account. The merchant loses the dollar amount of the transaction.

Why Do Chargebacks Occur?

Here are some common reasons chargebacks are triggered:

• The card was fraudulent.
• Customer (cardholder) disputes quality or receipt of merchandise.
• The amount charged to the card was incorrect.
• Processing errors were made during the transaction.
• Proper authorization was not obtained.
• Business did not fulfill a retrieval request.

How do I Avoid a Chargeback?

Read our chargeback prevention page to discover ways you can avoid or minimize chargebacks. Need immediate assistance? Call us at 1-800-571-2606.