Chargeback
Chargeback
- What it is
- A forced reversal of a card payment through the cardholder’s bank
- Who starts it
- The buyer, by going to their own bank rather than the seller
- Typical reasons
- Goods not received, service not provided, transaction not made
- How it differs from a refund
- A refund is made by the seller voluntarily; a chargeback is forced by the bank
- What it means for a business
- The sum is debited, a penalty, and a rising refund ratio up to closure of the account
In plain words
A chargeback is a forced return of money on a card transaction, initiated not by the seller but by the cardholder’s bank. Put simply: the buyer goes not to the shop but to their own bank and disputes the charge, and the bank investigates and, if the claim is justified, takes the sum back from the seller.
It must not be confused with an ordinary refund: that is made by the seller voluntarily, by agreement with the customer. A chargeback is a dispute through the card scheme, with a formal procedure, deadlines and an obligation on the seller to prove that the goods were delivered or the service provided. The grounds vary: goods not received, a service not as described, a transaction not made by the cardholder.
For a business it means not only losing the sum but also a reputational indicator. Card schemes and banks have thresholds for the acceptable share of chargebacks: exceeding them leads to penalties, more expensive acquiring and closure of the merchant account. That is why it pays to resolve disputes directly with the customer before they go to the bank.
When it concerns you
How the dispute works
- Goes to their own bank
- States the grounds
- Keeps to the deadlines
- Checks the justification
- Requests documents from the seller
- Takes a decision
- Proves delivery
- May challenge the decision
- Bears the costs if it loses
- Card scheme penalties
- Higher tariffs
- Closure of the merchant account
How the process works
- 01The buyer goes to their bank
- 02The bank checks the grounds
- 03Documents requested from the seller
- 04A decision on the dispute
- 05Refund or rejection
What you need to know
- A chargeback is initiated by the buyer through their own bank
- The deadlines are limited by the card schemes’ rules
- The seller must prove delivery of the goods or service
- The chargeback ratio is a risk indicator for the bank
- A refund and a chargeback are fundamentally different procedures
Common mistakes
- Ignoring a customer’s complaint before they go to the bank
- Not keeping proof of delivery and correspondence
- Missing the deadlines for responding to the bank’s request
- Treating a single dispute as trivial when the ratio is rising
- Working without a back-up payment provider
What this means for a BRIDGES client
We advise paying contractors abroad in such a way that you keep documents and a clear payment trail. This protects you both in a dispute and later — when a bank or a programme asks what the money was paid for.
Frequently asked questions
01 /How does a chargeback differ from a refund?
A refund is made by the seller voluntarily. A chargeback is a forced procedure through the cardholder’s bank, with deadlines and an investigation.
02 /How do you start a chargeback?
Go to the bank that issued your card with a description of the situation and supporting documents. The seller is the other party to the dispute in this process.
03 /Are there deadlines?
Yes, they are set by the card schemes’ rules and are limited. It is not worth delaying the claim.
04 /Is the money always returned?
No. The bank assesses the justification and both parties’ documents. If the seller proves that the service was provided, the refund will be refused.
05 /What does it mean for the seller?
The sum is debited, there is a penalty, and the chargeback ratio rises. Exceeding the acceptable ratio leads to more expensive acquiring or closure of the merchant account.
06 /How can a business reduce the risk?
Answer customers quickly, keep proof of delivery, describe the terms clearly and resolve disputes before the customer goes to the bank.
See also
Read next
This material has undergone editorial review by BRIDGES.
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