Understanding Debit and Credit Cards Chargeback

Chargeback is a scheme by which any you can get money back from your bank in case the transaction was unsuccessful. Or reversing a transaction from your card provider, in case of a disputed transaction linked to your credit or debit card.  Meaning when the good bought by the customer was defective, service provided was unsatisfactory or the delivery was not done even though the payment was done. The money is returned from the supplier’s bank and not from the supplier directly.

There are quite a few reasons of claiming a chargeback. The primary reason could be that the purchase made from the company had a displeasing outcome. Or the goods promised, were not satisfactory or were faulty. Another reason could be non delivery of the items. Besides there could be bank related issues like transaction processing error or multiple times/incorrect amounts being deducted by the bank. Lastly there could be cases of fraud related to the purchase. But chargeback is not legally procedure and is not protected by law.

The claim is addressed to the bank providing the debit or credit card services. The bank in turn asks for a refund from the supplier’s bank. Chargeback is not a guaranteed process, and there is no guarantee that the money will be recovered. Moreover there is no confirmation that the supplier will accept the reasons for a chargeback. As a result chances of getting the money back, seems bleak.

The process is to complain about the issue to your bank/card provider within 120 days of the purchase. After which the money back process is initiated from the supplier’s bank. If the complain is made under section 75 the credit card company becomes legally responsible. The chargeback is about Visa/ Master card/Amex process. In case the card provider rejects you charge back claims, the case can be escalated to the Financial Ombudsman Service.

Debit Card is applicable to all goods bought by debit card like Visa, Maestro and American Express Networks. Credit Card, charge back is applicable on goods costing less than a fixed amount. Debit Card chargeback process is a more difficult as compared to Credit Card, since the banks are less willing to cooperate.