A chargeback is a reversal of a card transaction and usually occurs when a cardholder raises a dispute with their financial institution (also known as the issuer) in relation to a purchase made with their credit or debit card.
The processing and investigation of chargebacks are governed by the schemes (i.e. Visa, MasterCard or American Express). This includes timeframes, transaction processing requirements and the acceptable documentation that banks and acquirers (such as Smartpay) must submit.
A chargeback may result in the amount of the original sale and a chargeback fee to be deducted from the merchant’s account. The reasons why chargebacks occur may vary; however, they are generally the result of customer dissatisfaction with their purchase or because of unauthorised or fraudulent use of their card.
