Chargeback Reasons

Chargebacks occur for a variety of reasons but there are several that stand out as the most common ones. These reasons include:

• Customer disputes.
• Fraud.
• Processing errors.
• Authorization issues.
• Non-fulfillment of transaction copy requests (only if fraud or illegible).

Chargebacks probably cannot be completely eliminated, yet merchants can take steps to prevent them or reduce them in number. Many of the chargebacks are a result of mistakes on the part of the merchants and can be easily avoided. Merchants who understand and implement proper transaction-processing procedures are much less likely to inadvertently cause a chargeback. Other chargebacks, however, are beyond the control of the merchant. Such chargebacks can be caused by errors made by merchant banks, card issuers, and cardholders. Merchant Responsibility The main interaction in a chargeback process is between the card issuer and the merchant processing bank. The card issuer sends the chargeback to the merchant bank, which may or may not be able to resolve the issue on its own, without involving the merchant. Merchants have a direct responsibility for taking action to remedy and prevent chargebacks. Your financial and administrative liability for chargebacks is spelled out in your merchant services agreement with your processor.