What is a chargeback and how can merchants avoid it

A chargeback is a transaction reversal that occurs when a customer disputes a charge on their credit card or debit card statement with their issuing bank. The customer is essentially asking their bank to act as an intermediary in resolving a dispute with the merchant.

Chargebacks can happen for a variety of reasons, including:
  • The customer claims they did not authorize the charge
  • The customer claims they did not receive the goods or services they paid for
  • The customer claims that the goods or services were defective or not as described
  • The customer’s card is lost or stolen and used to make a purchase without their knowledge or consent
  • or any other reasons involving a merchant not clearly identifying the policies involved in the purchase (e.g refund policy, delivery policy, etc)
Are chargebacks avoidable?

While it is not possible to completely avoid chargebacks, merchants can take steps to minimize their risk and reduce the number of chargebacks they receive. Some of the steps that merchants can take include:

  • Clearly communicate the terms and conditions of a sale or transaction to the customer
  • Provide detailed and accurate descriptions of products and services
  • Obtain proper authorization for all transactions (i.e 3D secure)
  • Respond quickly to customer inquiries and complaints
  • Keep accurate records and provide them when requested
  • Ensure proper security measures are in place to prevent fraudulent transactions

In addition, merchants should be familiar with the chargeback process, including the chargeback reason codes, so they can take appropriate action and respond effectively to disputes.
It’s important to keep in mind that chargebacks are costly and time-consuming for merchants, and also may hurt the merchant reputation and rating, so it’s in the merchant’s best interest to take the steps needed to minimize chargebacks and resolve disputes quickly when they do occur.

Paymennt.com is PCI compliant and has a dedicated compliance department that works with merchants if a dispute is filed in order to contest the case and help the merchant. All transactions on paymennt.com are 3D secure as well which adds an additional layer of protection from fraudulent or unauthorized card transactions on the paymennt network.
Get in touch with Paymennt.com today to learn more and open an account

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