How to understand the chargeback (dispute) process?

🤖 Explain with AI

A chargeback occurs when a consumer asks their bank or credit card company to refund a payment, claiming they were wrongly charged or the merchant didn’t fulfill the agreement.

  • The Workflow: The bank reviews the customer’s claim -> The bank may contact the merchant -> If valid, the bank refunds the customer and takes the funds from the merchant (plus a fee).

  • The Impact: Disputes can lead to lost revenue, penalty fees, and reputational damage.

  • Merchant Responsibility: It is crucial to have clear policies and open communication with customers to prevent disputes before they happen.