What is a chargeback?

A chargeback occurs when a card transaction is disputed by either:

The cardholder (consumer/payer) through their bank

The card issuer (bank) without the cardholder’s involvement

How does a chargeback work?

When a consumer initiates a chargeback, the merchant is notified and has the opportunity to provide documentation and dispute the claim if they believe it is unjustified. This may be the case if the consumer received the correct product or service.

In some cases, the card issuer can initiate a chargeback without the cardholder’s request. This often happens in e-commerce transactions, particularly with subscription payments, where recurring charges may attempt to bypass Strong Customer Authentication (SCA) / two-factor authentication.

If a chargeback is related to an authorisation issue, meaning the transaction was not approved through two-factor authentication, it cannot be disputed.

More information on PSD2 authentication rules is availablehere.

Why do chargebacks happen?

Chargebacks typically occur for the following reasons:

Fraud

An unauthorised person has used the card to make a purchase.

Friendly fraud

The cardholder disputes a legitimate transaction, often due to misunderstanding or confusion. This may happen when:

The cardholder does not recognise a charge on their statement

A subscription payment is processed unexpectedly

A family member has made a purchase without the cardholder’s knowledge

Service issues

Instead of contacting the merchant directly to resolve a problem, a consumer may dispute the transaction. This is common in cases of:

Shipping delays

Receiving a damaged product

Dissatisfaction with the product or service

Merchants can reduce the risk of chargebacks by ensuring clear transaction descriptions, providing accessible customer support, and maintaining transparent refund and cancellation policies.