Chargeback

Also called payment dispute

A chargeback is a forced reversal of a card payment initiated by the buyer's bank rather than by the seller.

A chargeback is not a refund. A refund is you returning money; a chargeback is the bank taking it back, usually with a fee attached, and the burden of proof sits with the seller.

For digital products the evidence that matters is delivery: a timestamped record that the file was made available and accessed, plus the terms the buyer agreed to. Keeping that automatically is far easier than reconstructing it during a dispute.

A sustained chargeback rate above roughly one percent puts a merchant account at risk, which is why processors care about it more than the amounts suggest.

In practice

A clear descriptor on the bank statement prevents a large share of disputes, because many are simply buyers not recognising the charge.

Common mistake

Ignoring refund requests until they escalate. A refund costs the sale; a chargeback costs the sale, a fee, and your standing with the processor.

Chargeback

In practice

Common mistake

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