What are chargebacks?
Chargebacks are something that all businesses have to deal with. A chargeback happens when a cardholder disputes your payment with their card issuer. Once a cardholder disputes a payments, the transaction is reversed and the customer receives their money back until the chargeback has been decided.
What happens once a cardholder has requested a chargeback?
- A cardholder contacts their bank to request a chargeback
- The transaction amount in question is provisionally returned to the cardholder and the merchant is notified of the chargeback
- The merchant can choose to dispute the chargeback or accept it
- If the merchant decides to dispute, they must submit evidence to the cardholder's bank, who will provide a ruling
- If the merchant wins the ruling, the funds are returned to them - if they lose, the cardholder retains the funds
Why do chargebacks happen?
Chargebacks can be issued for many reasons: poor-quality services/products, processing errors, unfamiliar names on a cardholder's bank statement or fraud (on the part of a cardholder or a merchant).
How can my business prevent chargebacks?
Whilst all businesses have to deal with occasional chargebacks, it's important for merchants to limit how many they receive as much as possible. Merchants should use tools to authenticate customers and also ensure the correct business name is appearing on customers bank statements to avoid confusion. Some chargebacks are avoidable so make sure that your business is taking the correct steps to prevent ads many as possible!
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