Chargeback
A chargeback is the reversal of a card payment initiated by the cardholder or their bank — for example, in the case of fraud, non-delivery, or incorrect debiting.
Chargeback
A chargeback is a mechanism in card payments that allows cardholders to reverse a transaction. The process is initiated by the cardholder or their issuing bank (issuer) when a payment is deemed unauthorised, incorrect, or fraudulent.
For merchants, a chargeback means not only the loss of the transaction amount, but also a chargeback fee (typically CHF 20-50 per case). Too many chargebacks can result in a merchant having to pay higher transaction fees or, in the worst case, losing their ability to accept card payments.
Common reasons for chargebacks include: fraud (stolen card details), goods not or poorly delivered, goods differing from the description, duplicate charges, or an unauthorised purchase. Merchants can reduce chargebacks through clear product descriptions, proof of delivery, 3-D Secure, and a transparent return policy.
Chargeback examples
A cardholder notices an unknown charge and reports it to their bank. The bank initiates a chargeback.
A customer orders goods in an online shop but never receives them. They contact their bank and request a chargeback.
A merchant receives a chargeback notification and must submit proof of delivery as evidence within 14 days.
Chargeback FAQ
What is a chargeback?
A chargeback is the reversal of a card payment initiated by the cardholder or their bank. Reasons can include fraud, non-delivery, or incorrect charges.
What does a chargeback cost you?
In addition to losing the transaction amount, the merchant pays a chargeback fee of typically CHF 20u201350 per case. High chargeback rates may result in additional penalties or higher transaction fees.
How can you as a merchant avoid chargebacks?
Use 3-D Secure for card verification, deliver goods with tracking and delivery confirmation, describe products accurately, respond quickly to customer enquiries and offer a transparent return policy.
How long can a chargeback be submitted?
With Visa and Mastercard, a chargeback can usually be submitted up to 120 days after the transaction. For specific reasons (e.g. fraud), the deadline can be extended up to 540 days.
Can you as a merchant dispute a chargeback?
Yes, in the so-called representment process, you can submit documents — such as proof of delivery, communication histories, or 3-D Secure protocols — to dispute the chargeback.
