Chargeback

Chargeback is a dispute resolution mechanism in the payment industry initiated by a cardholder, resulting in the reversal of a transaction.

When a cardholder identifies an unauthorized or fraudulent transaction on their statement, they can request a chargeback from their issuing bank. The bank investigates the claim, and if deemed valid, the transaction amount is refunded to the cardholder, and the merchant incurs a chargeback fee.

Chargebacks also occur due to issues like undelivered goods, defective products, or dissatisfaction with services. While chargebacks protect consumers from fraudulent activities and unscrupulous merchants, excessive chargebacks can adversely affect merchants’ reputations and financial stability. Managing chargebacks involves maintaining transparent communication, providing excellent customer service, and implementing fraud prevention measures to minimize disputes and protect cardholders and merchants within the electronic payment ecosystem.