[Term of the Day]:Chargeback

[Term of the Day]:Chargeback

Term of the Day 
 

Chargeback 

 

Definition — What is a chargeback?


A Chargeback also called a payment dispute is the act of a customer filing for the return of their funds directly with the bank. When a buyer makes a purchase, they pay the required amount of money for the transaction. However, on occasion, the customer will request the money back from the merchant. This can happen for several reasons, the top three being payment processing error, fraud, and commercial disagreement. If the bank rules in favor of the customer, the funds are returned to them from the merchant account or business bank account. If the bank rules in favor of the business, the disputed funds are returned to the merchant's account.

 

Businesses are at a greater risk of losing money from customers who opt to file a dispute with their bank instead of working directly with merchants to resolve the issue or receive a refund. Merchants may suffer heavy penalties for chargebacks. If a merchant receives too many chargebacks, they will no longer be given permission to accept credit cards from the card associations. To prevent your business from facing frequent chargebacks, here is A Merchant’s Guide to Understand and Prevent Chargebacks.


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