Chargeback

A chargeback is a reversal of a credit card transaction initiated by the cardholder's issuing bank, much like a traveler retracing their steps to recover a lost treasure. Chargebacks are designed to protect consumers from unauthorized or fraudulent transactions, but they can also be a source of financial loss and administrative burden for merchants.

Example

A customer purchases a product from an online store using a credit card. Upon receiving the product, they discover it is damaged or not as described. The customer contacts their credit card issuer to dispute the transaction, and the issuer initiates a chargeback, reversing the funds back to the customer's account. The merchant, in turn, is debited for the transaction amount and may also incur additional fees or penalties. Merchants can reduce chargebacks by providing accurate product descriptions, maintaining clear communication with customers, and implementing robust fraud prevention measures.