Chargeback

A chargeback starts when a cardholder contacts their bank to contest a charge, for example as unauthorized, not as described or a subscription they believe they cancelled. The issuing bank files the dispute through the card network with a reason code, and the merchant’s processor debits the disputed amount, usually with a dispute fee.

The merchant can accept the chargeback or respond with evidence within a deadline set by the network and the processor. If the bank accepts the evidence, the funds come back. The issuer can continue the dispute through further stages, such as pre-arbitration, depending on the network’s rules.

For subscriptions, many chargebacks come from forgotten renewals, unclear billing descriptors or hard-to-find cancellation. Clear renewal reminders, an easy cancel option and quick refunds when a customer asks are often cheaper than fighting. Chargebacks also count toward network monitoring programs.