Chargeback: Definition, Meaning & Guide for Indian Businesses

A chargeback is a disputed transaction reversed by the card-issuing bank at the customer's request. Common reasons: fraud, undelivered goods, defective product. Merchants must defend chargebacks within 7-14 days.

What is Chargeback?

A chargeback is when a customer's bank reverses a credit/debit card transaction after the customer disputes it. Common causes: 'I did not authorise this' (true card fraud), 'item not delivered', 'item not as described', or 'I was double-charged'. The merchant has 7-14 days to submit evidence — order confirmation, shipping proof, delivery signature, communications. Chargeback rates above 1% of transactions trigger fines and possible gateway termination. Reduce chargebacks by: clear billing descriptors (use the brand name, not a holding company), prompt customer support, generous returns policy, and 3D-Secure (OTP) on every transaction.