What is chargeback?

A chargeback is a process that allows consumers to dispute a transaction and request a refund through their bank or payment provider. This mechanism is typically used in cases where a customer believes there has been fraudulent activity, unauthorized charges, or failure to receive goods or services as promised. The chargeback request is examined by the financial institution, which may reverse the transaction if it finds that the claim is valid. It is important to note that chargebacks can impact both consumers and merchants, potentially leading to financial loss for the latter. Therefore, businesses often implement measures to minimize the risk of chargebacks, such as maintaining clear transaction records and transparent communication with customers.