Understanding Chargebacks: a Guide for Small Businesses

A chargeback is a reversal of a payment made on a credit or debit card when the payment could be incorrect or fraudulent.

The chargeback process protects the cardholder from being held liable for charges they didn’t make, and is meant to encourage businesses to improve their quality of service. Chargebacks can happen due to fraudulent activity, billing errors or customer dissatisfaction with products or services, for example. They can affect small businesses acutely, as they pay a fee if a chargeback is granted and risk losing their goods. Chargeback managers have reported a rise of 76% in chargebacks year on year.

Chargebacks vs refunds: key differences

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