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Payments

Chargeback

A cardholder disputing a charge with their bank, reversing the payment and adding a fee regardless of the outcome.

A chargeback is a forced reversal initiated by the cardholder’s issuer, not by you. You lose the funds immediately, pay a fee, and can contest it with evidence, a process that takes weeks and is often lost even when you are right.

For subscriptions, the most common reason is a customer who did not recognise a recurring charge or thought they had cancelled. Most of those are preventable with a clear billing descriptor, a renewal notice before annual charges, and a cancellation flow that actually cancels.

Chargeback ratios are monitored by the card networks. Sustained ratios above roughly 1% put your ability to accept cards at risk, which makes prevention a commercial priority rather than a support one.

Related terms

  • Refund Returning money already captured, as opposed to reducing an outstanding balance with a credit note.
  • Settlement and payout Funds moving from the card networks to your bank account, usually in batches and net of fees.
  • SCA and 3-D Secure Strong Customer Authentication, the European requirement for two-factor verification on many card payments, implemented through 3-D Secure.