A chargeback is a forced reversal of a transaction that is initiated by the cardholder’s bank (the issuing bank). It occurs when a customer disputes a charge on their statement and asks their bank to reverse it. Chargebacks were created to protect consumers from fraudulent transactions, but they can be a significant problem for merchants, resulting in lost revenue and additional fees.
Frequently Asked questions (FAQs)
- What are common reasons for chargebacks?
Common reasons include fraudulent transactions (the cardholder didn’t authorize the purchase), a customer not recognizing the charge, product or service disputes (e.g., item not received, not as described), and technical errors like being billed twice. - How can I prevent chargebacks?
Provide excellent customer service, have a clear return policy, use a recognizable business name on your statements (you can set this in Stripe), and keep records of transactions and customer communications. For in-person sales, the risk is much lower than for online sales. - What should I do if I get a chargeback?
Stripe will notify you and ask you to submit evidence to prove the charge was legitimate. You can manage this process through your Stripe Dashboard. If you win the dispute, the funds are returned to you. If you lose, the customer keeps the funds, and you may be charged a dispute fee.
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