Payments glossary · Risk
Chargeback
A chargeback is the reversal of a card payment by the cardholder's issuer, usually after the cardholder disputes it. The amount is taken back from the merchant through the acquirer, often with a fee, unless the merchant successfully defends the dispute.
How Chargeback works
Visa groups disputes into four categories: fraud, authorisation, processing errors and consumer disputes such as goods not received or not as described. The issuer sends the dispute to the acquirer, which debits the merchant and asks for evidence. The merchant can accept the loss or respond with proof such as delivery records, authentication data or refund confirmations, and the case may pass through further stages. Every stage has a time limit under scheme rules; for example, a Visa issuer has 120 calendar days from the processing date to raise a card-absent fraud dispute.
Chargebacks differ from refunds. A refund is initiated by the merchant, costs little and preserves the customer relationship; a chargeback is forced, carries a fee and counts against the merchant's dispute ratio. Card schemes monitor these ratios. Since June 2025, Visa's Acquirer Monitoring Program (VAMP) has combined reported fraud and disputes on card-not-present transactions into a single ratio; merchants above its thresholds must take remedial action, and fees levied on the acquirer may be passed on under the merchant agreement.
Practical ways to reduce chargebacks include recognisable billing descriptors, easy refunds and cancellation, prompt delivery updates, 3-D Secure on riskier transactions (which can shift fraud liability to the issuer) and fast responses to dispute notices. Bank transfers and vouchers have no card-style chargeback process, although other refund rights may apply.