A chargeback refers to the reversal of a payment made by a customer using a credit or debit card. It is initiated by the customer who disputes a transaction and requests their bank or credit card issuer to refund the amount. Chargebacks are typically used as a consumer protection mechanism when there is a problem with the purchase, such as fraud, non-delivery of goods or services, or a discrepancy in the transaction.

When a chargeback is initiated, the customer’s bank or credit card issuer investigates the claim and has the authority to reverse the payment made to the merchant. The funds are returned to the customer’s account, and the merchant may incur additional fees or penalties. Chargebacks can be a complicated and time-consuming process for merchants, requiring them to provide evidence or documentation to prove the validity of the transaction. It is essential for businesses to have clear policies and procedures in place to handle chargebacks effectively and minimize their occurrence to maintain a good reputation and financial stability.

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