A Chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on his account transactions report. A chargeback can be considered a refund since it returns specified funds taken from an account through a prior purchase. It differs from a voided charge which is never fully authorized for settlement. Chargebacks are focused on charges that have been fully processed and settled. Chargebacks can often take several days for full settlement as they must be reversed through an electronic process involving multiple entities.

What does chargeback mean?

A chargeback usually occurs when there has been a dispute regarding a purchase/transaction. A chargeback can occur for transactions on credit cards, debit cards or bank payments. Chargeback can also be considered as a type of refund since it is the return of funds from a prior purchase/transaction. A chargeback is different from a voided charge because the voided charge is one that has not been fully processed, while a chargeback has been fully processed and settled.

In the case of chargeback transactions that have not been initiated by the merchant, the merchant acquiring bank will often charge the merchant a fee. These fees are usually charged on each chargeback transaction and some acquiring banks will charge additional fees as penalties for chargebacks.