Chargeback

What is a chargeback?

A chargeback occurs when a credit card holder disputes a transaction and the card issuer reverses the charge, pulling the funds back from the merchant. Chargebacks protect consumers from fraud and merchant errors but create challenges for legitimate businesses. When you receive a chargeback, the amount is debited from your merchant account pending resolution.

Responding to chargebacks

You have limited time to respond to a chargeback, typically 7 to 14 days. Gather evidence supporting the transaction: signed receipts, delivery confirmation, correspondence with the customer, and records of services provided. Submit your response through your payment processor. Strong documentation often results in reversing the chargeback in your favor.

Preventing chargebacks

Use clear business descriptors so customers recognize charges on their statements. Respond promptly to customer complaints before they escalate to chargebacks. Require signatures for deliveries. Keep thorough records of all transactions. Have clear refund policies and honor reasonable requests. Some chargebacks are unavoidable, but good practices minimize legitimate disputes.