ONLINE PAYMENT GLOSSARY

Chargeback

A chargeback takes place when the cardholder informs his/her bank that they have not authorized a transaction or that the product ordered by him/her has not been delivered. In other words, it is an outstanding amount because the merchant is required to reimburse the cardholder.

There are several levels of chargebacks, the most serious being for fraud, or if the card has been stolen.

Online payment companies and partner banks will commonly only tolerate up to 1% of chargebacks for fraudulent transactions. Beyond this level of fraud, merchant accounts are closed by the bank cards network and your URL could be blacklisted and your future business seriously affected. For this reason, companies like Cashtronics, which offer active anti-fraud solutions, provide a very important service.