What is a chargeback?

Oliver January 2020 5 min

Table of contents

Many people consider a chargeback as just another way of getting a refund for a product or service, so what is a chargeback, and how does it differ from a refund?

  • A refund is made by a merchant when a transaction with a customer has not happened correctly. Either the goods didn’t arrive, the goods were faulty, or something else. In this case, the consumer would contact the merchant and hopefully resolve the issue and receive a refund if necessary.
  • A chargeback should only be used when the consumer has contacted the merchant to discuss a problem and is still not happy with the outcome. In this case, the consumer can ask their bank to start a chargeback.

A refund will result in the return of your funds because it is initiated by the merchant, whereas a chargeback may not. For this reason, the most important point to note is that a chargeback request should be the last resort. 

With a dispute over a product or service, a bank will not normally raise a chargeback unless you have tried to resolve the issue directly with the merchant first.

The other use of a chargeback is to reclaim money deducted from your account without your authorisation. If you see a payment on your Penta statement that you don’t recognise, then it should be possible to call the money back. Please contact Penta customer support as soon as possible, and they will guide you through the process.

One of the great things about a Penta Business account is that you can set up notifications for receipts, payments and more. Every time money is deducted from your account, you’ll get a notification so you can contact our support team right away if you think something is wrong.
Open a business account with Penta and we will be on your side if you need to make a chargeback.

How do you make a chargeback?

As a consumer, you simply need to contact the bank or credit card company that made the payment on your behalf. Each bank will have its own procedures, and at Penta, the first step is to contact customer support.
Penta will submit the chargeback on your behalf and act on your behalf during the dispute.

How does the chargeback process work?

Once you have contacted customer support, they will ask you some questions to assess your claim. Assuming you are entitled to make the claim, Penta will collect as much detail as possible so that a chargeback form can be completed. You will also need to provide supporting documentation. Once we have all the required information, our team will submit everything on your behalf to the relevant card network.

What documents do I need to raise a chargeback?

Unlike a refund, where you are dealing directly with the merchant, a chargeback claim has several people/entities involved, and you need evidence to support your claim. 

On one side is you, the consumer, with your bank to represent you. On the other side are the merchant and their bank. In the middle, acting as the arbitrator is the card network, such as Visa or MasterCard. Both sides will have to present their evidence, and the card network will decide if it justifies the chargeback. 

Therefore, having as much evidence as possible before you begin the process is important, such as;

  • Any receipts you have
  • Copies of any correspondence between you and the merchant
  • Photos of the goods if you are claiming they are damaged
  • If you are claiming the goods are not fit for purpose, any supporting evidence to prove that
  • A police report if you are making a claim against a fraudulent deduction from your account

In short, the more evidence you can provide the better.

Once we have submitted your claim to the merchant, they have two choices. First, they can settle the claim with you and refund the money. Second, they can provide their own evidence to the card network, and allow them to decide.

How long do chargebacks take?

The individual card networks set timescales for assessing your case. Initially, the case is waiting for a response from the merchant you are in dispute with. Depending on the card network, the merchant has a set time within which they must respond;

  • MasterCard – the merchant must respond within 45 days from the chargeback date
  • Visa – the merchant must respond within 30 days from the chargeback date

Once the card network has reached a decision, they will pass the details to the team at Penta and we will contact you as soon as possible.

Chargeback fraud

The chargeback process is in place to protect consumers, giving you a means of claiming back your money when a purchase goes wrong or someone takes money from your account without authorisation. 

Unfortunately, the process has been used by some consumers to reclaim money for reasons that are less than honest. For example, if you bought an item but then changed your mind, that is not a reason to use a chargeback. Sometimes consumers have made a chargeback claim by mistake because they don’t recognise the merchant name on their statement or even forgot that they bought an item. 

Therefore, it is vitally important to contact the merchant first, before speaking to your bank about a chargeback.

Open a Penta Business account

Penta is the perfect business account for your company. Open an account today to enjoy all the benefits of an online business account.

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