The Complete 2022 Guide to Chargebacks for Merchants

 A chargeback is a request for a refund from a cardholder to their issuing bank. The request is typically initiated by the cardholder after they’ve attempted to resolve the issue directly with the merchant, and it can be for any number of reasons including fraud, unsatisfactory goods or services, or billing errors.

How do chargebacks work?

If a cardholder initiates a chargeback, their issuing bank will open an investigation. Once the investigation is opened, the merchant will be contacted and asked to provide documentation to support their case. This documentation may include sales receipts, invoices, or other communication between the customer and merchant. Once the documentation has been reviewed, the issuing bank will make a decision to either grant or deny the chargeback.

What are the consequences of a chargeback?

If a chargeback is granted, the merchant will be debited for the amount of the transaction plus any associated fees. The cardholder will also have the transaction reversed on their statement. If a chargeback is denied, the merchant will retain the funds from the transaction.

How can merchants avoid chargebacks?

There are a few things merchants can do to avoid chargebacks, including:

• Providing excellent customer service: By responding quickly to customer inquiries and requests, Merchants can head off many issues that could lead to a chargeback.

• Keeping good records: Keeping accurate and up-to-date records of transactions can help Merchants build their case if a chargeback is filed.