The term “chargeback” describes the process that occurs once a Card holder refuses to accept responsibility for a charge on his or her credit card. It may also be initiated by the issuing bank of the card holder.

There are many reasons why chargebacks happen, but here are some of the most common. Your customer/card holder:

  • Did not receive a product or service
  • Does not recognize the charge on his or her credit card statement
  • Believes the product or service was defective, damaged or not as it was described
  • Was a victim of fraud – his or her credit card was stolen or used without consent
  • Proper authorization approval code was not obtained
  • Duplicate processing


  1. Card holder contacts their issuer (bank that stands behind the card) explains the problem, and asks for money back.
  2. If the card holder appears to have a reasonable claim, the issuer will begin the chargeback process.
  3. During the chargeback process, the card issuer will obtain funds from the respective payment brand, visa/MasterCard/discover. Who in turn debits the funds from the Acquirers bank and will debit the funds from your bank account that is on file with your processing company.
  4. Chargeback documents are generated and Mailed to the merchant.
  5. The merchant will have 10 days from the date the documents were mailed to respond to the case. *Merchant can fax or mail their response.
  6. Once the merchant’s documents are received the case will be reviewed by our merchant resource center.
  7. The case is either Declined or Accepted. If declined there is no further recourse. If accepted, the merchant will be given a conditional credit while their rebuttal is forwarded to the issuing bank for review.
  8. The issuing bank has 60days (Visa) 45days (MasterCard) to review the merchant’s response.
  9. If the issuer agrees with the merchant’s response the conditional credit becomes permanent.
  10. If the issuer does not agree they will come back in with a request for Pre-arbitration (visa) or Second Chargeback (MasterCard’s form of pre arbitration).
  11. The merchant will be sent a pre-arbitration Advice. They will need to choose whether they want to continue with the case. If they choose to proceed with arbitration by checking – YES- the pre arb advise states **I understand if Visa rules in favor of the card holder I will be responsible for the chargeback amount and Visa filing fees of $500.** If the merchant checks -NO-the merchant is accepting the chargeback and will be debited just the chargeback amount.


  • Did not receive a product or service: supply signed receipt along with signed proof of delivery to the AVS- address that verified as the cards billing address. If product was returned Accept the chargeback.
  • Does not recognize the charge on his or her credit card statement: supply signed sales receipt/and imprint for keyed sale, invoice of product or services.
  • Service/Product was defective, damaged or not as it was described: provide evidence that service/product was as described. Provide evidence that product was repaired or replaced**Merchants should keep in mind that their return policy has no bearing on disputes that fall under Reason Code 53: Not as Described or Defective Merchandise
  • Fraud – credit card was stolen or used without consent – provide signed sales receipt for swiped transactions or signed sales receipt and signed imprinted sales receipt
  • Proper authorization approval code was not obtained- provide proof that a valid 6 digit authorization code was received.
  • Duplicate processing: if two or more valid sales were processed provide each signed receipt. If there was an error and only one sale is valid. Accept the chargeback. No response is needed


  • Do not take a card after it has declined. Ask for different form of payment.
  • If card does not swipe due to magnetic stripe being damage, this is a red flag –suggest different form of payment
  • Have all deliveries signed for by only the card holder
  • Authorize all transactions in full. Pre authorizing is not a full authorization. You are only due payment of the authorized amount
  • Batch out your POS or terminal everyday – this will help prevent authorization related cases and late presentment cases.
  • Get an imprint on all manually keyed in transactions. This is done with a manual imprinter.
  • Refund policy must be on the receipt, and Invoice, right by the signature line.
  • Have all special instructions, terms and conditions, signed by the card holder – such as restocking fees, late deliveries..etc.

Card Absent Merchants:

  • For proper disclosure, your refund and credit policies may be mailed, e-mailed, or faxed to the cardholder. To complete the sale, the cardholder should sign and return the disclosure statement to you.
  • Do not take a card if address does not match or CVV (three digit code on back of card) does not verify
  • Only ship to the AVS matched address
  • Foreign cards are risky the address cannot be verified. Suggest do not take foreign cards.

Internet E-commerce:

Your website must communicate its refund policy to the cardholder and require the cardholder to select a “click-to-accept” button to acknowledge the policy. Purchase cannot be complete without card holder accepting.

  • Only ship to the AVS matched address
  • Foreign cards are risky the address cannot be verified. Suggest do not take foreign cards

For more information please refer to: