What is a Chargeback?

What is a Chargeback?

A chargeback is a dispute initiated by a customer against the merchant who accepted their card as payment in exchange for goods or services. The chargeback process is available as a protection for cardholders against fraud and merchants who do not provide their product/service as promised.

When a bank receives a chargeback dispute from one of their cardholders they open an investigation by contacting the processor (Stax) and requesting evidence that the product/service was provided. Stax will then notify the merchant of the chargeback and advise as to what documentation should be provided.

While rare for most merchants, chargebacks can be a costly and time-consuming strain. Dishonest cardholders can try to take advantage of the system and the burden is on the merchant to prove that they fulfilled their commitment to the cardholder. It is recommended that you respond to all chargeback notices as quickly as possible and try to resolve any disputes with your customers before they result in a chargeback.

What are common chargeback reasons?

  • Fraudulent transaction
  • Duplicated charges
  • Not as described/defective merchandise
  • Services not provided or merchandise not received
  • Refund not processed after returned item

How can I avoid chargebacks?

  • Always insert EMV chip, swipe magnetic strip, or imprint any card that is present. (Inserting the chip greatly reduces your liability and should always be your first choice).
  • Use PIN to verify debit transactions.
  • Ensure that all displayed pricing is clear and up to date.
  • When appropriate, collect billing address, zip code, and CVV.
  • Use additional ID verification such as a driver’s license.
  • An agreement or authorization form provides you with additional documentation for large purchases and can also detail the product or service should a dispute arise later. Have the customer sign the form.
  • Maintain a history of tracking and proof of delivery.


Did you receive a chargeback notification? See our article below for advice on how to respond.

How to Respond to a Chargeback


If you have any further questions please contact our support team at support@fattmerchant.com