When a cardholder encounters an issue with a charge on their credit card, they can reach out to their bank to dispute the charge. In response, the bank may initiate a chargeback or inquiry process.
What happens when a customer files a chargeback?
This is the typical process for a chargeback:
The cardholder contacts their bank to dispute the charge.
The cardholder's bank sends a chargeback request to Stripe, our payment processor, which will hold the disputed amount and deduct a chargeback fee from your account.
The credit card company requests evidence to assess the charge's validity.
We collect and submit the evidence on your behalf for the chargeback response.
We counter the dispute and forward the evidence to the credit card company.
The credit card company reviews the evidence. (This may take up to 75 days)
The credit card company resolves the chargeback and relays it to us the result.
🚩 When a bank sends you a chargeback, they also charge you a processing fee for the dispute. This will cost $15 USD + transaction fees from Stripe. This is non-refundable regardless of the outcome of the case.
What are the common reasons for filing a chargeback?
Here are the common reasons the customers reach out for a dispute:
Fraudulent: The most common reason for a chargeback is when it's marked as "Fraudulent." This occurs when the cardholder claims that they did not authorize the charge, often due to the card being stolen or used without their permission.
Unrecognized: The chargeback is marked as Unrecognized if the customer doesn’t recognize the merchant name or location on their credit card statement.
Duplicate: A chargeback may be marked as "Duplicate" when a customer believes they've been charged twice for the same product or service.
Product not received: When a customer believes they did not receive the goods or services they purchased or if you failed the requested fulfillment date.
💡 Being prepared for these situations is crucial. Having a clear process, proper documentation, and open communication with your customers can go a long way in resolving chargeback disputes.