Guide to Chargebacks
What is the chargeback process?
If a cardholder sees a transaction on their card that they have not made, or if they were charged an incorrect amount, they can dispute that transaction with their bank or financial institution. If the cardholder’s bank feels the dispute is valid, the transaction in dispute is reversed from your merchant account and refunded to the cardholder. This process, and ultimately the reversal of the payment is called a chargeback.
How does the chargeback process work?
Why do chargebacks occur?
Here are some of the common reasons for chargebacks.
- A customer doesn’t recognise the transaction
- A transaction was fraudulent
- A transaction was processed more than once
- The incorrect amount was charged
- The goods or services have not been received
- A credit or refund was not processed
- A sales receipt was changed without the customer’s authorisation.
How can I prevent chargebacks from occurring?
There are a few things you can do to help reduce the risk of chargeback requests:
- Follow the rules. Always follow the terms of your merchant agreement for processing transactions and retain proof for all transactions for at least 18 months.
- Keep detailed records. Keep detailed records showing that your customer has received the goods and services they paid for.
- Get a delivery receipt. Always deliver goods or services as advertised and get a confirmation that goods were received by the actual cardholder.
- Reduce refund fraud. Only refund to the same card that was used to make the purchase. Do not refund with cash or cheque if a purchase was made on a card.
- Use a familiar name. Use a business or company name that is recognised by your customers – and matches the name on your transaction receipts.
- Promptly resolve disputes. Be proactive and communicate clearly with your customers when there is an issue.
- Why shouldn't I just refund the customer?
- Who runs the chargeback process?
- Do I get the opportunity to challenge all chargebacks?
- Will I be notified that money is being taken out of my account?
- What about manually keyed transactions?
- How will I be notified of a chargeback?
- How long should I keep my receipts?
1. We will email you where we hold a valid email address for you. A condition of your merchant facility is to ensure that you provide St.George Bank with a valid email address.
St.George Bank does not determine the scheme rules and regulations regarding Visa, Mastercard, eftpos or UnionPay purchases. All banks/ financial institutions are governed by scheme rules and regulations.
The nature of the dispute and the type of chargeback will greatly influence what can be done about defending chargebacks. Please also note that any supporting documentation must be provided in a timely manner and if we determine that the evidence provided is insufficient, it may result in a chargeback.