Chargeback Analysis

Chargeback analysis is the process of examining data related to customer disputes on credit card transactions (chargebacks) to identify trends, patterns, and root causes behind these disputes, ultimately aiming to understand why chargebacks occur and develop strategies to prevent them in the future; it involves collecting, analyzing, and interpreting data from transactions and chargebacks to gain insights into customer behavior and operational inefficiencies.?

Chargeback Processing

The chargeback process can be initiated by either the merchant or the cardholder’s issuing bank. If initiated with a merchant the process is similar to a standard transaction; however, the funds are taken from a merchant’s account and deposited with the cardholder’s issuing bank.

For example, a chargeback initiated by a merchant would begin with a request sent to the merchant’s acquiring bank from the merchant. The acquiring bank would then contact the card’s processing network to send payment from the merchant’s account at the merchant bank to the cardholder’s account at the issuing bank.

Types of Chargeback

1. Fraudulent Chargebacks

These occur when a transaction is made without the cardholder’s knowledge or consent, often due to stolen credit card details or identity theft. The cardholder disputes the charge as soon as they notice the unauthorized transaction.

2. Non-Receipt Chargebacks

This type arises when a customer claims they did not receive the goods or services they paid for. Common causes include shipping issues, delivery errors, or miscommunication between the merchant and the customer.

3. Quality-Related Chargebacks

These happen when a customer is dissatisfied with the quality of the product or service. It may occur if the item is damaged, defective, or significantly different from what was advertised.