Chargeback

A chargeback happens when a cardholder asks their bank to reverse a card transaction and the bank agrees to open a dispute. The issuing bank takes the funds back from the merchant through the card network, and the merchant can either accept the loss or contest it.

How the process works

1. The cardholder disputes a charge with their card issuer, within the network's time limits, often up to 120 days.
2. The issuer files a chargeback with a reason code, and the amount is debited from the merchant's account, usually with a chargeback fee.
3. The merchant can respond with evidence, a step called representment.
4. The issuer reviews the evidence and decides; further stages, such as arbitration by the card network, are possible.

Common reasons

• Fraud: the cardholder says they didn't make the purchase.
• Goods or services not received.
• Not as described or defective.
• Duplicate processing or incorrect amount.
• Cancelled subscription still being charged.
• The cardholder doesn't recognize the charge on their statement.

Evidence that wins

Merchants who win disputes show clearly what was bought, when and by whom: an itemized receipt, proof of delivery, sign-in or usage logs, cancellation policies accepted at checkout. Clear statement descriptors and easy-to-find receipts also prevent many disputes from being filed at all, especially "I don't recognize this" cases.