No one wants to open an email with the subject line “Chargeback Notification”. Chargebacks cause enormous amounts of grief for merchants, but they also protect consumers from fraudulent charges.

Balance must be struck between merchants and consumers in order to live in payment harmony, and it starts with an educated merchant.

What is a chargeback?

A chargeback occurs when a customer files a complaint with their bank regarding a fraudulent or suspicious charge on their statement.

There are many different types of chargebacks. The four most common are fraudulent, credit not processed, item not received, and technical.
  • Fraudulent – The customer believes that someone else used their card to purchase this item.
  • Credit Not Processed – The customer returned the product in question and was never received the agreed upon refund or credit.
  • Item Not Received – The customer never received the product.
  • Technical – There was a technical issue at the point of checkout. Often the customer was charged twice for one item.

Walk me through the whole process
  1. Jack was looking at his credit card statement and saw a transaction that he doesn’t remember purchasing from Stocks and Axes. After confirming, he calls his credit card company and reports a dispute to his statement.
  2. The credit card company opens an investigation. There will be a fee to this investigation which is given to the party at fault.
  3. The funds plus the fee are withdrawn from Stocks and Axes merchant account and given to Jack.
  4. Jack’s credit card company notifies the bank or payment processor for Stocks and Axes to report the chargeback.
  5. Stocks and Axe’s bank opens an investigation and alerts Stocks and Axes owner of the chargeback.
  6. The owner of Stocks and Axes can dispute the chargeback or can accept the chargeback and fee. If the dispute is won the funds are re-charged to Jack but the fee of the investigation is not refunded.

The dispute can take anywhere between six weeks to six months. If you receive a lot of chargebacks, your account can be canceled and flagged as fraudulent.

Merchants need to be proactive in reducing chargebacks and reducing fraud. Protect your business and your customers with Beanstream, Your Partner in Payments.
Nicole Stright

Nicole Stright

Nicole is our coffee dependent content specialist. With a quick-witted way with words, she could make you enjoy reading an instruction manual. She was born American, raised Canadian and has lived briefly in Poland. A quintessential west coastian she can be found running the seawall, practicing savasana in yoga or enjoying an over-hopped I.P.A. Nicole is responsible for all of the bean puns as well as creating compelling copy driven by analytics that converts. She strives to simplify the complicated and wants readers to easily understand the often convoluted industry of payments.
Nicole Stright