What is chargeback?

Chargeback is a reversal technique that usually occurs when a transaction which is either done by the merchant’s customer or through the bank also called as credit card issues, then the owner may get the chargeback. This generally happens as a disputed file in which the amount would be debited from the high risk merchant account. In such case, merchant can get back his transactions through filing proper case against fraudulent with related evidence. If all the facts and figures of disputed file is in favor of credit card holder, then he can get back his funds.


The chargeback mechanism:

  • The customer:

A customer or a client is a person who purchases goods or services from a merchant and he is credit card holder. Customer is one who will file a dispute in case of any issue such that if he would see any kind of uncertain transactions on his billing.

  • Issuing Bank:

An issuer is a bank who issues the credit card to his customers.  Issuing bank is responsible of making transactions processing by providing funds from customer to the merchant.

  • Acquiring bank:

An acquiring bank is responsible for all the processing on merchant side. It is the one who receive payments, funds through card network ant all the services are provided by this acquiring bank.

  • The merchant:

The merchant could be anyone who owns a business, an organization or a company and he receives his payments in return of providing goods or services to customers.

What are the reasons for chargeback?

Following are some of the common reasons that cause the chargeback issue.

  • Issues related to credit card holder in terms of transactions, services of acquiring bank or merchandise receipt.
  • Credit card holder not getting the services and the purchased goods
  • Improper and inaccurate transactions to merchant account using the card
  • Lack of appropriate authorization and credentials
  • In case of card theft chargeback, it is used by someone without the consent of owner
  • Errors and blunders in credit card processing such as invalid account information, passwords, card expiration or similar transaction issues.
  • If retry request is not being accepted within time limit, chargeback occurs.

How to prevent from chargeback prevention?

As there is an utmost need to avoid such chargeback issues in high risk merchant account, so here are some of the preventions that would be helpful in preventing these related issues.

  • Ensure the name and other related information must be accurate and known to your clients so that he or she wouldn’t make any mistakes while making transactions
  • You should be alert to all retrial requests within 10 to 12 days
  • Make a toll free number so that your customers are liable to contact you in case of any query
  • Maintain a strong communication link with your customer to allow them to answer any of the questions.