Chargeback Definition

Merchant Account Chargeback Explained:

What is a Chargeback? A Chargeback occurs when a customer formally disputes a charge by contacting the issuer of the credit card. Customers usually dispute charges if they do not recognize the amount or business making the charge, or if they disagree with the transaction. Merchants can take steps to avoid Chargebacks by ensuring that the proper business name appears on the customers’ statements, providing itemized receipts, implementing fair return policies, and working cordially to resolve disputes before they become Chargebacks. If merchants feel that a Chargeback was unfairly issued, they can fight it by submitting proof that the customer approved the transaction. This can be done with signed receipts, invoices, or other tangible proof of authorization.

Merchants should work to avoid Chargebacks because too many can result in actions by merchant account provider such as placing holds on funds and terminating the account.  Providers may also raise the transaction fees, or even place a merchant on the Terminated Merchant File if the Chargebacks are suspected to be caused by fraud. The typical fee for a chargeback is $25-$35 per incident.

Chargeback Video Explanation

Use of this video does not constitute an endorsement of any kind by CardPaymentOptions.com

Phillip Parker is a former merchant services sales agent who believes the industry has been overrun by people who engage in fraud and deception in order to steal from hard working business owners. He created this website to help you avoid the bad players, save money on fees, and to get peace of mind with your merchant account. If you would like to help support his work, learn more about our cost reduction service. We can evaluate your statement, tell you exactly how much you're overpaying, and then help you dramatically reduce your fees with your current credit card processor. Looking to switch instead? See our list of the best merchant account providers.

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