What is Chargeback?

Definition

Chargeback is the reversal of a payment previously made, usually initiated by a bank or payment processor when a dispute arises regarding a transaction. It is commonly used in cases of fraud, errors, or customer disputes, and requires careful management to protect financial interests.

Key Features

• Dispute Handling: Provides a structured process to address transaction disputes and initiate reversals.

• Recovery Mechanism: Supports Chargeback Recovery to reclaim funds where applicable and reduce financial losses.

• Modeling and Analysis: Uses Chargeback Model frameworks to predict trends, manage risks, and improve prevention strategies.

• Financial Controls: Ensures proper authorization and documentation to prevent unauthorized or erroneous reversals.

• Audit and Compliance: Maintains records of chargebacks for internal audits and regulatory reporting.

Summary

Chargeback is the reversal of a payment due to disputes, errors, or fraud. Effective management through recovery strategies, modeling, and proper controls helps minimize financial impact and maintain compliance.