The Chargeback Cycle

The chargeback cycle is a series of interactions between several participants. Following are the stages of the chargeback process.

1. The chargeback process begins with the cardholder disputing a transaction or contacting his or her card issuer with disputed information.
2. The card issuer electronically returns the transaction (charges it back) to the merchant bank (also called acquiring bank or simply Acquirer) through the respective credit card company (e.g. Discover or American Express) or association (Visa or MasterCard).
3. The credit card company or association reviews the eligibility of the transaction to be charged back and, if appropriate, forwards it to the merchant bank.
4. The merchant bank receives the chargeback and either resolves the issue or, if unable to do so, forwards it to the merchant.
5. The merchant receives the chargeback. If the merchant has a proof that the transaction is valid (e.g. a sales receipt), the proof is submitted (represented) to the merchant bank. If the merchant is unable to produce a proof, the chargeback may have to be accepted.
6. The merchant bank receives the represented transaction and sends it on to the credit card company or association.
7. The credit card company or association receives the represented transaction and, if appropriate, forwards it to the card issuer.
8. The card issuer receives the represented transaction and, if appropriate, re-posts it to the cardholder's account. If the chargeback issue is not adequately addressed, the card issuer may submit a dispute with the credit card company or association.
9. The chargeback process ends with the cardholder receiving information resolving his or her dispute and may be re-billed for the item or receive a credit.