Chargeback

When a cardholder’s bank (issuer) reverses all or part of a card transaction back to the merchant bank (acquirer), which typically kicks the transaction back to the merchant’s account, leaving the merchant financially liable for the payment and subject to fines. Chargebacks can be initiated by customers or by cardholders’ banks (for example, due to procedural errors). Chargebacks that exceed 1 percent of monthly sales generally are considered excessive.

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