There are indeed quite a lot of advantages of accepting credit cards for your online business transactions; the main advantage being the increase in sales and global reach of the business. But with every such boon, comes a curse which may ruin the reputation of a Merchant. Credit Card chargeback is one such thing that every merchant wants to stay away from. Such repeated chargeback ruin the reputation of the merchant and eventually result in drastic fall in sales volumes.

What exactly is a chargeback?

A credit card chargeback is a kind of a customer protection mechanism adopted by every credit card issuer. This right is provided to every credit card holder in the US by the Regulation Z of the Federal Reserve under the Truth in Lending Act. If some buyer files a chargeback against a seller for the amount he/she has paid for the purchase via his/her credit card, the buyer can get back the paid amount back to his bank account. Though this process takes some time, but for fraudulent transactions one can easily get his money back. This reversal of payment can be viewed as an added advantage of using credit cards for purchase instead of cash.

When can a customer file chargeback?

A customer can file chargeback for the payment made by his credit card anytime he thinks that the transaction has been fraudulent. Here are some of the events when the customer can file a chargeback to the credit card issuing bank:

• Product received is not as described, or customer not satisfied with the product

• Fraud on part of the buyer or seller • Transactions done with a stolen credit card

• Double billing for the same product, which may take place due to faulty transaction between the bank and the merchant. This is also known as Duplicate Charging

• Date entry error or untimely processing of the order request which may lead to the delivery of unwanted items

• No product received within the specified time frame

How can a customer file a chargeback?

Filing a chargeback against a merchant, though not a hectic process, but is very time consuming. Here’s the process how one can ask for the refund of the payment made.

• The cardholder needs to call the credit card issuing bank and explain the problems or the reasons for their chargeback. He must have sufficient proof with him as otherwise, the chargeback or the credit card dispute is considered invalid and the customer is charged a processing fee thereof.

• Credit card issuing bank asks for a mutual agreement with the seller and the buyer. If that does not take place and there’s no mutual agreement, the chargeback is filed by the bank to the merchant.

• A thorough investigation is done by the buyer bank and the merchant’s credit card processing bank and proofs are submitted by both the parties for this.

• If the credit card issuer of the buyer thinks the transaction is fraudulent, then it transfers a temporary amount to the buyer’s account and asks for it from the merchant’s bank, which transfers it immediately if it thinks that the transaction has really been fraudulent on the merchant’s part.

• If the merchant’s proofs are valid and both the banks agree to that, the chargeback is considered invalid and the customer is charged a processing fee.

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