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Chargebacks: Learn what it is, its importance, and where it occurs

Editorial Airtm

November, 28, 2023

4 min. reading

Chargeback or refund in digital payments occurs when a customer requests their financial institution to reverse a previously made transaction. This happens when the customer believes the transaction is unauthorized, fraudulent, contains an error, or when they haven’t received the corresponding product or service.

Similarly, chargebacks are crucial as they serve as a protective measure for consumers. It offers the possibility of reclaiming their money in case of transactional issues. Moreover, it encourages trust in online purchases as it represents a mechanism to resolve payment inconveniences.

During this blog, we’ll explain the most common scenarios where a chargeback occurs. Additionally, we’ll provide practical tips to avoid and prevent it.

Most common scenarios where chargebacks occur

The typical situations leading to chargebacks can be summarized in the following points:

Non-recognition of the statement or receipt

This situation happens when, upon reviewing your bank statement or receipt from your debit or credit card, you find a payment you don’t recognize. For example, if you receive a charge for an additional TV or internet subscription service you didn’t request, or a fee that doesn’t align with your purchases.

Multiple charges

When at a store, you’re charged multiple times for the same item. For example, in a shop where you purchased only one wallet, you get charged two or more times for the same item.

Online purchases

When you make an online purchase and the product doesn’t meet expectations or you don’t receive the correct item. For instance, when buying a cell phone and receiving a defective or different product than the one requested.

Subscription cancellation

It occurs when you cancel a contract or subscription, but the company continues to make charges to your account. For example, when you’ve canceled a gym membership and continue to receive monthly charges.

Unauthorized or fraudulent card activity

It happens when someone makes unauthorized purchases with your debit or credit card. For instance, seeing charges on your account that you don’t recall and suspecting that someone else used your cards without your consent.

Useful tips for avoiding and preventing chargebacks

Here are some tips that everyone should know:

  • Verify payment details before confirming.
  • Keep a detailed record of your payments.
  • Each seller, provider, platform, or financial entity has specific policies for requesting refunds. Therefore, we recommend understanding their policies or terms.
  • In the case of immediate transfers, banks usually automatically reverse transactions after 24 or 48 hours. We advise contacting the bank for information.
  • Use reliable and secure payment methods or payment gateways,  such as internationally recognized platforms.
  • If you encounter an issue or discrepancy in a payment, first discuss it with the provider or seller before requesting a chargeback. Sometimes, it might be due to an error or misunderstanding.

Although these tips can help minimize chargeback risks, if one occurs, we suggest contacting your financial institution or payment platform for further assistance.

In conclusion, chargebacks are protective mechanisms that allow you to recover funds in irregular purchase or service contracting situations.

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