What is a Chargeback?

A chargeback is essentially the reversal of a charge made to your credit or debit card. Credit and debit card transactions are highly controlled and regulated in order to protect both consumers and merchants. Visa and MasterCard for example, have a set of terms and conditions that govern the use of their cards.

These terms and conditions govern the rights and responsibilities of the cardholder, their bank, the merchant and the merchant’s bank.

A consumer who has lost or had their card stolen, for example, can notify their bank to reverse any charges made. In addition, card holders are able to reverse an authorized charge for goods or services that were not received as advertised.

What does a Chargeback cover?

Chargebacks cover all transactions made with a credit and debit card

What is the Chargeback process?

Step 1 – Customer initiates a dispute request over a transaction.

Step 2 – Issuing bank reviews dispute charge and send transaction to acquiring bank electronically

Step 3 – Acquiring bank receives the chargeback request, resolves the issue automatically or forwards it to the merchant

Step 4 – Merchant either accepts the chargeback request or rejects it by sending evidence to the acquiring bank

Step 5 – Acquiring bank reviews the evidence received from the merchant, ensure it meets the requirements before sending it to the issuing bank

Step 6 – Issuing bank reviews evidence received from the merchant and makes a decision on the chargeback request

Step 7 – Cardholder and merchant are notified of the decision where either party can initiate arbitration in the event that they disagree with the decision

How long do I have to submit a claim?

The timeframe to issue a chargeback typically depends on the card companys’ terms and conditions. Generally, cardholders should advise their bank within 120 days from the date of the transaction, however cases can extend up to 540 days and even beyond that with certain card companies. The key for a successful chargeback, however, is to file the request with your bank as soon as possible.

How long will it take for my money to be refunded?

It is difficult to accurately ascertain how long it will take for a successful chargeback as each case is different and there are many variables that determine the final outcome. Generally speaking, the chargeback process can take anywhere from 4 – 6 months. This time frame could be shorter when dealing with a simple case and slightly longer when dealing with more complicated cases.

What is a chargeback fee?

A chargeback fee is imposed by banks in an effort to recover incurred costs while handling consumer chargebacks and disputes associated with your account.