A chargeback is a transaction dispute sent from a cardholder to their issuing bank. The origin of the cardholder’s dispute could be the result of fraud, a credit for a merchandise return that was issued but never received, a disagreement over a charge or because the cardholder never received the goods or services they ordered
Stages of a Chargeback
- Retrieval Request – A request for a copy of sale. No monetary impact to the merchant.
- Chargeback – A reversal of a credit card sale disputed by the cardholder or card issuer. Money is debited from Merchant and credited back to the cardholder.
- Reversal –
- Reversal acceptance – After the association reviews the rebuttal and agrees with the merchant, funds will be reversed back to the merchant. A reversal acceptance letter is sent to the merchant and funds are credited.
- Reversal denial – After the association reviews the rebuttal and believes that issues regarding the chargeback were not addressed, they will issue a reversal denial.
- Pre-arbitration – A continued dispute from a cardholder or issuer. A pre-arbitration letter is sent and requires the merchant to respond within a set period of time (usually a few days). If the merchant chooses to proceed, they must agree to pay the cost of the arbitration if they lose the case. If the merchant wins, the cardholder/issuer will be responsible to pay the filing fee.
Chargeback Flow
Resolution Process
To learn more about chargebacks and the resolution process, please refer to the below resources.