A chargeback fee may apply if a so-called chargeback has been made by the cardholder. A chargeback is a reversal of a credit card transaction when the cardholder cancels the payment with his credit card issuing bank (issuer bank). Chargeback basically serves to protect the cardholder from abuse and fraud. However, chargebacks always incur costs – the chargeback fee.
Reasons for a chargeback fee
In the past, no chargeback fee was charged. However, due to the higher processing costs for chargebacks, all banks now charge a chargeback fee, which online merchants have to bear in some cases and can also pass on to the customer if the chargeback was not legal. A valid reason for a chargeback can be, for example, goods that were not delivered or not delivered in full. In the e-commerce sector, however, chargebacks and the resulting charges are mainly caused by card misuse.
Chargeback rate decreases due to security procedures
Issuers such as the credit card operators Mastercard and Visa encourage online merchants to use the 3D Secure security procedure in order to reduce the chargeback rate. Modern payment providers use the procedure as standard, so that the risk of a chargeback fee for the online merchant is significantly reduced. These costs can otherwise amount to around 20 to 50 euros, depending on the bank. With a chargeback rate of up to one percent, this can result in considerable costs for the e-commerce store. To avoid these, the 3D Secure procedure can be used. Without this procedure, the online merchant bears responsibility for the entire payment processing – from cardholder verification to the chargeback fee. In the case of 3D-Secure, the issuer is liable for all steps of the payment and also bears the chargeback fee. Only in case of wrong deliveries or similar disputes the merchant is liable.
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