A chargeback is a credit or debit card charge that is disputed by an issuer (a financial institution that issues debit and credit cards) on behalf of their cardholder. Funds from the disputed transaction may be returned directly to a cardholder’s bank account if the dispute is valid.
A chargeback can happen when a customer successfully disputes a payment transaction, which could be for a variety of reasons, including a customer suspecting fraudulent activity (e.g. stolen credit card information to make fraudulent purchases), or merchant error (e.g. purchasing a product that was never delivered, or a service that was never provided).
Merchants are notified of chargebacks through their Merchant Direct account. To view and manage chargebacks, log in to Merchant Direct, go to the tab “Disputes” and select which request you need. Also, by looking at your “Outstanding Chargebacks” or “Outstanding Copy Request Report”, you can see the most current and outstanding chargeback requests that need your attention.
If you feel that a purchase was authorized by the cardholder and the sale follows the correct business terms and conditions, then you can dispute a chargeback. Remember to always respond on or before the response due date noted within the case details.
Merchants can protect their business against fraud-related chargebacks by encouraging customers to use Chip & PIN or tap when making an in-person purchase or investing in fraud prevention tools and technology (such as 3D Secure) for ecommerce websites.
Having best practices in place can help your business avoid chargebacks altogether, or help your business win a dispute should one be placed. For example: