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Merchant services: what is a chargeback?

A chargeback occurs when a customer calls their credit card company and declines to pay for the product purchased from the merchant (for whatever reason). Since someone has to pay for the product, and it's not the customer, it is charged back to the merchant to foot the bill.

Note: when applying for a merchant account, remember to review the chargeback fee. in the application. It can range as high as $10 - $35 per incident (yes, that is in addition to the amount of the product itself being charged back).

A good rule of thumb is to credit a customer directly before it gets to the point of a chargeback. "The customer is always right."

A credit can almost always be done thru the merchant's terminal or payment gateway and requries the same short amount of time it would take to process a sale.

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