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Chargebacks: What are they? How do they work? What do I do? Why did I get one?

A chargeback is not always negative. It can be a costly learning curve, but also an opportunity to strengthen your business' security protocols.

A chargeback is the reversal of a credit card payment initiated by a customer (the cardholder) who successfully disputes a charge directly with their issuing bank.

Chargebacks often stem from customer confusion (unrecognized billing descriptor) or dissatisfaction. No business wants to be hit with a chargeback, but ultimately these disputes can be opportune in providing data to improve clarity, communication, and refund policies.

In professional terms, it is a mechanism where a cardholder asks their bank to retrieve funds from the merchant, effectively serving as a bank-initiated payment reversal rather than a standard merchant refund.

THE CHARGEBACK PROCESS

  • Kovena receives a chargeback notification from their Acquirer/Payment Service Provider.
  • Kovena notifies the merchant of the chargeback.
  • The disputed transaction amount as well as the Chargeback fee is immediately reversed from merchant's account.
  • Kovena assists the merchant to collect and submit evidence to defend their case before the action due date.
  • Kovena submits the evidence to the Aquirer/PSP who represents the merchant to the Issuing bank.
  • An outcome is determined/reached and communicated to Kovena after 50-90 days.
  • If the chargeback is ruled in the cardholder's favor, the funds from the transaction that were lost plus the Chargeback fee is debited. In the event a chargeback is ruled in favor of the merchant, all fees are returned to the merchant.
 
WHAT YOU NEED TO DO
  • Review the chargeback details and take special note of the deadline.
  • Obtain all necessary evidence to help defend your case - signed receipts, valid ID cards, etc.
  • Be responsive in the communication process with us (Kovena)

 

WHY DID YOU GET A CHARGEBACK?

 

There are quite a few reasons that a customer can request a chargeback, but the ones most likely to happen in the accomodation/travel industry are:

  1. The customer didn’t receive the service.
  2. The service the customer received wasn’t as expected or agreed.
  3. The customer does not recognize the charge on their card statement.
  4. The transaction appears under a parent or holding company on the bank statement instead of the actual merchant name.
  5. A family member used the card but forgot to inform the account holder.
  6. The card details were compromised, and a fraudster made the purchase (Fraud).
  7. The customer made the purchase but is now falsely claiming they don't recognize the charge (commonly referred to as Friendly Fraud).
  8. A customer was incorrectly charged, and was due a refund which they never received.