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What Is a Chargeback?

A Chargeback is when a customer disputes a transaction on their credit or debit card. They request their banking institution to petition the merchant processor to return the disputed funds. Chargebacks are meant to protect consumers from unauthorized transactions and fraudulent charges.

A chargeback may occur on both debit and credit card transactions. Chargebacks can be granted to a cardholder for any number of reasons. Here are a few common reasons:

• The customer was charged for items they never received.
• There was a duplicate charge made by mistake.
• A technical issue occurred that caused a mistaken charge.
• The cardholder's card information was compromised and a fraudulent charge was made.

Why Am I Being Charged a Chargeback Fee?

The Chargeback Fee is a fee that the customer's banking institution charges the merchant when the disputed funds are returned to the cardholder. Since the dispute can only be resolved by a Banking Institution Representative, fees are charged per disputed transaction to cover the cost of the bank processing the chargeback.

These chargeback fees would then be reflected on the Payout Report. It is a common practice for card processors to charge a fee for each disputed and reimbursed transaction.

If you are using the Payments card processing Managed Chargeback service, instead of seeing a fee for every individual chargeback throughout the month, you'll see only a single fee. Click here for more information on the Managed Chargeback service (this link will open in a new browser tab for you).

Can I Dispute a Chargeback?

Yes, you can always submit information to dispute a chargeback. If you are using the Managed Chargeback service mentioned above, our team will manage all disputes for you.

How Do I Avoid Chargebacks?

If there is a mistake on an order or if the customer did not receive part of their order, it is often better to try to resolve the issue directly with the customer. Contact the customer immediately to initiate a refund on the merchant's end or to offer in-store credit.

See also Tips for Detecting Fraud linked below to learn some healthy business practices to avoid and prevent fraudulent charges.

Related Topics

Managed Chargeback Service

Global Fraud Protection

Tips for Detecting Fraud

Frequently Asked Questions

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