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How a chargeback works


3 min read

Even if you do your utmost to prevent fraud and faulty transactions there is always a risk of being affected. When this happens, the card networks have developed a thorough process, known as a chargeback, to handle claims from card holders. Here we give you the broad strokes of what that process looks like and what we, as your acquirer, can do to help you through it.

For individual merchants, the chargeback process can often seem extremely complicated, with many steps, intricate terminology and many different parties involved. That is why we try to do everything we can to get you through this process in the smoothest way possible.

Our experienced team of chargeback experts are there to guide you through all the steps as the case progresses. They will explain what kind of documentation is needed to contest a chargeback and translate any difficult terminology.

Here is a broad walk-through of the steps in a typical chargeback process and the help you can get from us.

  1. A chargeback begins with a card holder reporting an incorrect transaction to the card issuing bank. The reasons for reporting a transaction can vary, from stolen card information to the wrong amount having been charged or that the ordered product never arrived.
  2. When the card issuing bank receives the complaint they first evaluate if it appears to be correct. After that, they can then try to get the money back by initiating a chargeback process. The chargeback request is sent via the card networks (Visa, Mastercard or Union Pay) to us, the acquiring bank. In some cases this is preceded by a request for more information about the transaction; in which case we contact the merchant and explain what documentation is needed.
  3. When we receive the chargeback we send it over to the merchant in question, together with information on the reason for the chargeback. The merchant's account is then immediately charged the amount of the disputed transaction. If the merchant wants to challenge the claim they can reach out to us and we will tell them what information is needed to disprove the card holder's claim.
  4. If the merchant chooses to dispute the chargeback, we send the documentation that the merchant has compiled to the card issuing bank. If the bank deems that this evidence is sufficiently strong, the chargeback is simply recalled and the merchant is refunded. If the bank doesn't deem that the evidence is strong enough they can continue the process by filing a new chargeback request.
  5. If the bank chooses to submit a second chargeback, the merchant once again has to decide whether to dispute it or not. If we deem that we have sufficient evidence to continue the dispute it can be taken to arbitration. Arbitration means that a panel of independent experts from the card network decide if the chargeback is to be approved or not. Depending on the card network and the type of chargeback the arbitration process can differ. It is uncommon that a chargeback goes all the way to arbitration since the process can take a long time and result in large costs.


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