What is Chargeback?
Also known as: Payment dispute
A chargeback is the reversal of a payment from the merchant after the cardholder disputes the transaction through their own bank. It is raised for reasons such as unauthorised use, goods or services not received, or duplicate charges, and follows the rules of the card schemes (Visa, Mastercard, Troy).
How does Chargeback work?
- The cardholder disputes the charge with their bank; the bank forwards the dispute with a reason code to the merchant's acquiring bank.
- The acquiring bank debits the amount from the merchant and requests supporting documents.
- The merchant can respond with evidence such as delivery records, invoices or 3D Secure authentication (representment); the case is resolved under the card scheme's rules.
Key points
- A high chargeback ratio harms the bank relationship and commission terms
- For 3D Secure-authenticated transactions, fraud-related chargeback liability mostly shifts to the issuing bank
- Response windows are limited; documents must be submitted quickly
Chargeback with Treps
With 3D Secure 2.0 support, fraud scoring and a rules engine, Treps helps reduce fraudulent transactions that could lead to disputes. Keeping transaction records from all channels in one place makes it easier to retrieve dispute evidence quickly.
Frequently asked questions
What is the difference between a chargeback and a refund?
A refund is initiated voluntarily by the merchant. A chargeback is a dispute the cardholder raises through their bank, and the amount is reversed without the merchant's consent; additional fees may also apply.
How can chargeback risk be reduced?
Using 3D Secure, applying fraud rules, presenting product and delivery information clearly, using a recognisable merchant name on card statements and responding quickly to customer requests with refunds all reduce the risk.