What is chargeback and the reasons it may occur?
A chargeback is basically a disputed transaction. If the cardholder for any reason wishes to return his money paid for goods or services, he may ask his bank to forcibly remove funds from the merchant’s bank account rather than contact the merchant for a refund directly. If the issuer feels the cardholder’s request is valid, the funds will be removed from the merchant’s account and returned to the customer. In addition to the amount of the transaction, a merchant is also charged a fee for every chargeback they gain.
Chargeback can occur for the following reasons:
- the cardholder does not recognize the transaction;
- fraud (transaction is unauthorized);
- service\goods is not fully provided or not properly described;
- service\goods are not available or delivered;
- a refund request hasn't been issued;
- processing errors.
An excessive level of chargebacks will lead to an increase in the chargeback ratio, which could result in heavy fines and penalties as well as the loss of processing privileges. But no worries: all chargebacks are thoroughly investigated by our risk team and successfully disputed when all appropriated evidence is provided.
If you would like to learn about our chargeback disputing process please click here.