In this post we'll look at ten common questions on the subject of chargebacks.


1. What is a Chargeback?

A chargeback is when a previously-processed card sale is returned. The cardholder or their card issuer may be disputing the transaction, for example if it is fraudulent, if services are not provided, merchandise is not received, is defective or not as described.

The cardholder’s bank or provider returns the transaction (i.e. charges it back) to your card acquirer or provider. Chargebacks reflect consumer protection regulations in many countries and have been part of card scheme rules for many years.


2. How do chargebacks affect my business?

You may lose out if you have already provided the service or dispatched the goods. You may be debited by your card acquirer or service provider for the value of the previously-processed sale.

In addition, your acquirer or provider may levy a fee for each chargeback raised against your business. If you generate too many chargebacks, your acquirer may decide to take further action.


3. What are the most frequent causes of a disputed transaction?

Most card-related disputes happen when standard procedures are not followed. For example if your staff forget to authorise a transaction, accidentally submit a transaction more than once, fail to check the card’s expiry date, or don't cancel a recurring payment on cardholder request.


4. What is a chargeback reason code?

If a card issuer returns a transaction to an acquirer, they must do so using card scheme-specific codes that define the reason the transaction is being disputed. For example, fraud, authorisation, processing error, non-receipt of goods/services.

Mastercard and Visa number their reason codes slightly differently. Your acquirer or provider will always give a description of why the transaction is being disputed, in addition to quoting the appropriate numerical code.


5. What is a retrieval request?

A retrieval request (sometimes also known as a ‘request for copy’) is when the cardholder’s bank or provider requests more information about a transaction. Through your acquirer or provider, they are asking you to retrieve the particulars of the transaction. This may in itself jog the cardholder’s memory and help the issuer determine whether they have valid grounds for a chargeback. A retrieval request is not in itself a chargeback.


6. What happens behind the scenes with a chargeback?

The issuer and acquirer try to determine financial liability for the transaction. The card schemes have specific processes with regard to the presentment, chargeback, re-presentment of transactions, each with associated timeframes. If at the end of the dispute resolution process the participants cannot agree on their liabilities, the card schemes may rule on the matter.


7. How do I avoid chargebacks?

One of the best ways to avoid chargebacks is to prevent them from happening in the first place. Train your staff on standard card-handling practices and to follow terminal prompts.

Good business practices may also prevent complaints escalating into chargebacks. Communicate terms and conditions clearly. This includes return, refund and cancellation policies. Make it easy for customers to resolve queries with you in the first instance by providing contact details. And include frequently asked questions on your website.

If you send goods out to customers, ship goods before charging the customer’s card. Retain delivery confirmations as they may provide compelling evidence that the cardholder participated in the transaction.


8. What do I do if I receive a chargeback?

The end-to-end chargeback process is lengthy and may involve several stages. The key is to act promptly to avoid delaying the process, or missing deadlines. Find a copy of the transaction receipt and promptly fax or mail a legible copy to your acquirer or provider.


9. How do I contest a chargeback?

If you want to contest a chargeback, you will have to provide certain evidence depending on how the goods or services were rendered. For example, the cardholder’s signature on the pick-form or details from their identification when collecting the item in-store. Or a signed delivery receipt or courier tracking information when delivering to a customer’s address. In the case of e-commerce purchases or digital downloads, details of the customer’s IP address, e-mail address, description of the goods downloaded, date and time of download etc.

This type of compelling evidence may help your acquirer show that the cardholder participated in the transaction and received the goods.


10. Where can I find more information about chargebacks?

Contact us here -


PXP Financial

The End-to-end payment platform

PXP Financial provides a single unified payments platform to accept payments online, on mobile and at the point of sale. Powered by inhouse global acquiring, 200+ alternative payment methods & financial services, PXP processes over EUR 21 billion annually through our unified gateway.

Whatever your business needs today or tomorrow, PXP Financials’ innovative payment platform will support your business growth with all the payment services you will ever need from one source, wherever your business takes you.