How do Chargebacks work?

Chargebacks refer to a request from a customer to return his money. This scenario often happens when a customer isn’t satisfied with his purchase or if he received a different product than what he paid for. As a merchant, the chargeback system can be quite frustrating, and it may even be a threat to your business. As a customer, however, a chargeback can be used as your protection against fraudulent merchants.

To further understand how do chargebacks work, let’s first have a quick overview of the rationale behind them as well as their impact on both merchants and customers.

Chargebacks might seem like a traditional refund system, but it does have one major difference. Instead of contacting a merchant and asking for a refund, the consumer asks the bank to take money directly from the merchant’s account. An investigation then follows, and if the customer’s request is proven valid, funds are then deducted from the merchant’s account then returned to the customer. However, the customer isn’t required to return whatever he’s purchased.

Merchants won’t even know it has happened during that. Basically, a chargeback processing is leaned more towards customers with the following purpose:

  • To make customers feel more secure
  • To deter merchants from selling poor quality products
  • To make sure merchants can remain transparent
  • To protect customers from criminal fraud
  • There are several chargeback reasons that will prompt a customer to use it. They’re as follows:
  • When goods didn’t arrive or are damaged
  • When the merchant has delivered a wrong item
  • If the customer has suffered from identity theft
  • If unauthorized transactions were made on the customer’s credit card

Chargebacks can differ between payment processors. On average, it can take around 60-90 days to properly resolve. However, here’s how the chargeback process works in general:

  1. A customer makes a purchase either in person, via an app, or through an online store.

  2. In the event the customer notices an unauthorized transaction upon reviewing his credit card statement, he will then initiate the chargeback. First, he contacts his credit card company to request an investigation of the said transaction.

  3. The issuing bank will then contact the merchant’s bank and request evidence to refute the claim.

  4. After the evidence provided by the merchant’s bank is reviewed, the customer’s bank will then decide whether the purchase was valid or not.

  5. At this point, the customer should accept the proof and pay for the goods if the purchase is valid. However, if the purchase was not valid, the customer will receive a refund.

  6. There are instances when the customer will dispute the purchase and proceed to a process called arbitration. The arbitration process only happens when both the customer’s bank and the merchant’s bank didn’t come to an agreement. During the arbitration, the credit card company will review the proof from both parties. The decision made after this is absolutely final, and whoever loses will end up paying for the charges.

Fortunately, there are several chargeback services nowadays that protect you from instances of chargebacks and frauds. One such service is T&H Consulting. We specialize in chargeback processing consultation and brokerage check for FREE as well as chargeback processing services at very affordable prices. If you need help with chargebacks, don’t hesitate to get in touch with us!

Fill the form below and get your consultation!

Complete the Contact Form

    Related articles


    Dear Valued Customers and Partners, We need to inform you about fraudulent activities being conducted by an individual falsely claiming to be Cristian Sepulveda, a...

    June 15, 2021Who Is Bitcoin Creator Satoshi Nakamoto

    Who is Satoshi Nakamoto – the pseudonymous Bitcoin creator! Undoubtedly, Bitcoin has laid the foundation for the rapid development of Blockchain technology. Many have wondered...

    Still have questions?

    Get a free consultation


      We are recommended

      June 7, 2024

      It was great what this company did for me .i was hopeless about getting my money back from a company.But with help of mr Hassan and safoora savio and her teams help i got back as if my lost money back to my bank account.i am very thankful to safoora and her team who gave their helping hands in my case. Mr hassan always advise me that i will get back my money very thankful to him also.

      Hurry runnoo
      June 7, 2024

      They have been really helpful, especially Erik Grant! Keep doing what you’re doing 🙂

      Your Cart