Chargeback
Category: payment
A cardholder-initiated payment reversal through their bank, often due to fraud or disputes.
A chargeback occurs when a credit card holder disputes a transaction and their bank reverses the payment, pulling funds from the seller's account. Chargebacks are a significant risk for e-commerce sellers, as they lose both the product and the payment, plus may incur chargeback fees ($15-100 per dispute). Common reasons include fraud, product not received, and product not as described. Excessive chargebacks can result in account termination.
Examples
- • A seller receiving a chargeback on a $200 PayPal transaction loses the product, the $200 payment, and pays a $20 chargeback fee.
- • Amazon monitors chargeback rates closely; sellers with rates above 1% may face account suspension or funds withholding.
- • Sellers can dispute chargebacks by providing evidence (tracking numbers, delivery confirmation, customer communications).