What is a chargeback?
A chargeback (ters ibraz) is the reversal of a card payment through the card scheme’s dispute process. When a customer disputes a transaction, for example because of fraud, an unrecognised charge or dissatisfaction with the goods or service, the customer’s bank (the issuing bank) reviews the case. If it decides in the customer’s favour, the payment is refunded to the customer and withdrawn from the merchant’s account.
How the process runs
- The cardholder contacts the issuing bank to question a charge.
- The issuing bank reviews the claim and may make a temporary refund while it investigates.
- The merchant learns of the dispute from its own bank (the acquiring bank).
- The merchant can challenge the dispute with evidence such as receipts, shipping confirmations or customer communications.
- The issuing bank decides: if the chargeback is valid the customer keeps the refund; if not, the temporary refund is taken back and the merchant keeps the money.
Common causes
Disputes typically arise from genuine fraud, so-called friendly fraud, authorisation errors, processing errors (for example duplicate transactions) and customer disputes about goods or services not received, not as described or faulty.
Why it matters for fintechs
For marketplaces, payment facilitators and subscription businesses, chargebacks are a credit and operational risk as much as a customer-service issue. The scheme rules sit behind the bank relationships, and who ultimately bears a loss between merchant, platform and payment provider is usually decided in the merchant and acquiring agreements, so those contracts deserve a careful read before launch.
Is a chargeback the same as a refund?
No. A refund is given by the merchant. A chargeback is started by the cardholder through the issuing bank and decided by that bank under the card scheme’s dispute process.
What is friendly fraud?
Friendly fraud, also called chargeback fraud, is when a customer intentionally tries to reverse a legitimate purchase, or disputes one they have forgotten or misunderstood.
Related: PCI DSS, Strong Customer Authentication, Payment Institution.