What Are Credit Card Chargebacks, and Is It Possible to Reverse Them in 2026?

Credit card chargebacks protect consumers against fraud and other illegitimate charges. Credit card chargeback fraud statistics indicate that 86% of chargebacks are likely due to ‘friendly fraud,’ when a consumer initiates a chargeback scheme under a fraudulent claim.

This is a big problem for UK businesses since you can lose money to fraudulent claims, often with little warning.

The good news is that there are steps you can take to prevent and even reverse chargebacks. In this guide, we’ll explain everything you need to know about credit card chargebacks and how to reverse them.

What Is a Credit Card Chargeback?

Credit card chargebacks occur when a customer disputes a transaction on their credit card. This can be for reasons such as:

• Fraud
• Being charged twice for a purchase
• Never receiving a product or service
• Receiving a low-quality or damaged product

The credit card chargeback time limit is typically 120 days, so it’s possible to be subject to a chargeback for transactions that occurred several months ago.

When a chargeback on a credit card occurs, the bank that issued the customer’s card will remove the funds from your merchant account. Most merchant account providers also charge a fee for each chargeback. However, credit card chargeback merchant rights include a process known as representment to dispute the customer’s claim and recover your funds.

Refunds vs. Chargebacks

Importantly, chargebacks are distinct from refunds. If a customer requests a refund, they must follow your business’ refund policy and contact you directly to initiate it. Refunds are at your discretion.

Chargebacks, on the other hand, aren’t up to you. Customers can initiate a chargeback with their credit card issuer and aren’t required to contact you first to resolve the problem. It’s up to credit card issuers, not your business, to decide what situations qualify for a chargeback.

The good news is that you have a short window to contest a chargeback and have it reversed.

Note: If credit card terminology is confusing, a good place to start is our article explaining what a credit card’s CVV is and how it’s used.

Penalties for chargebacks

When a customer requests a chargeback, you’ll lose the money from the sale as well as pay an extra fee imposed by your merchant account provider. Azimul Hoque, a member of the Association of Chartered Certified Accountants with experience in the chargeback process as both a business owner and an accountant, notes that this is just the beginning for businesses that incur frequent chargebacks.

“If a merchant consistently exceeds Visa or Mastercard’s dispute thresholds, they can be placed in monitoring programs. This leads to penalties, higher fees, or even being banned from the card networks.”

Your merchant account provider can also cancel your contract. You may have difficulty obtaining another merchant account, as providers maintain lists of high-risk businesses they avoid working with.

Card networks and merchant account providers typically give you a few months to identify and fix the issues causing chargebacks before they begin imposing penalties. It’s important to monitor chargebacks closely and take prompt measures to prevent them.

The Credit Card Chargeback Process

Here’s an overview of how a credit card chargeback works:

1. A customer initiates a chargeback with their card issuer, usually through their online account. They must provide a reason for the chargeback, but they typically don’t need to provide any evidence to support their claim.
2. The bank that issued their credit card will immediately remove the funds from their purchase from your merchant account.
3. The issuing bank will contact you to ask whether you accept or dispute the chargeback. If you accept, the chargeback process ends here, and the customer gets their money back.
4. If you dispute the chargeback, the representment process will begin. This is an opportunity to make the case to the issuing bank that the customer’s claim is not legitimate.
5. You must provide evidence showing that the transaction was legitimate and that the customer received the correct product. Evidence could include receipts, photos of the product sold, and proof of delivery.
6. The issuing bank will make a decision based on the customer’s claim and the evidence you provided. If the chargeback is reversed, the funds will be returned to your merchant account.
7. If the issuing bank rules in your favour, the customer can appeal the decision by requesting arbitration. This involves a more detailed review of the circumstances surrounding a transaction and usually involves the credit card network (such as Visa or Mastercard). The arbitration process can take several weeks or more.

Importantly, credit card issuers require that you provide evidence to dispute a chargeback within a certain timeframe (usually 60 days). After this window expires, you can no longer contest the chargeback.

Common Credit Card Chargeback Reasons

Most merchants would prefer to avoid chargebacks altogether rather than spend time disputing them. So, let’s look at the most common reasons why chargebacks occur and the steps you can take to reduce them.

Fraud

Fraud occurs when a customer’s credit card is used without their knowledge or authorisation. Proactively identifying fraud is tricky, but there are several things you can do:

• Use a credit card machine with an EMV chip reader. EMV chips are more secure than magstripes and more difficult to counterfeit.
• For online purchases, ask for the card’s expiration date and security code (CVV), and use Address Verification Service (AVS) to verify the card’s billing address and confirm it matches the customer’s shipping address.
• Contact the customer directly to verify unusual or large transactions.

You can also implement 3D Secure tools such as Verified by Visa or Mastercard SecureCode.

3D Secure adds a little bit of friction to the checkout process since customers typically need to complete an authentication step with the bank that issued their card. But crucially, as Hoque points out, “if 3D Secure is used, liability for fraudulent purchases shifts to the issuing bank.” In other words, if a customer initiates a chargeback for fraud after a 3D Secure transaction, the bank will be the one paying, not you.

Shipping issues

Many chargebacks occur because a product never arrived at a customer’s home or was damaged during shipping. Options for addressing shipping-related chargebacks include:

• Shipping all packages with tracking and providing tracking information to customers.
• Using carriers that include photo proof of delivery with every package. This involves taking a photo of the delivered package with a GPS stamp to prove that the item reached the customer.
• Requiring a signature for package deliveries.
• Adding additional packaging material to protect items in transit.

You may also consider purchasing shipping insurance for expensive items. This won’t protect you from chargebacks, but it will allow you to file a claim against the carrier if an item doesn’t arrive or arrives damaged.

In addition, take photos of packed items before you close up the shipping box. Photographic evidence that an item was packed properly can be very helpful when fighting a chargeback in the representment process.

Customer doesn’t recognise your business name

Customers may initiate a chargeback if they don’t recognise your business’ name on their credit card statement.

This can be an honest mistake, but it’s more likely to occur if your business uses a billing identifier that differs from the business name customers see at checkout. Contact your merchant account provider to find out how to change your billing identifier. Hoque also suggests testing out how your descriptor appears on different banks’ statements.

If you can’t adjust your billing identifier, let customers know how your business will appear on their credit card statement during the checkout process.

Unclear product descriptions

Customers can initiate a chargeback if the product they receive is significantly different from what they thought they were getting. This is particularly prevalent in online sales, since customers rely on your product descriptions and photos.

Make sure that your descriptions and photos are clear, accurate, and up to date.

Recurring subscription disputes

Customers frequently initiate chargebacks on recurring subscriptions after forgetting they have auto-renewal enabled.

The best way to prevent this is to send an email reminder before a customer’s subscription renews. Hoque points out that many issuing banks require proof that a reminder was sent to reverse a chargeback.

How To Up Your Odds of a Chargeback Reversal

While you can’t prevent all chargebacks, the representment process gives you a chance to make the case for your business and have the chargeback reversed. This process can feel opaque to many business owners, so we’ll break down how it works and what you need to do to boost your chances of having the claim decided in your favour.

How representment works

If you dispute a customer’s chargeback, you typically have 30 to 60 days to submit evidence to the issuing bank to back up your sale. Your goal, says Hoque, is to deliver “a tight and irrefutable story supported by records that clearly links the cardholder to the transaction.”

Credit card chargeback rules are set by card issuers, and there are two key things to know about this process. The first is that card issuers assign different levels of value to different kinds of evidence. For example, Hoque says that photo proof of delivery is weighted much more than a tracking number alone. Check the issuing bank’s guidelines to find out what types of evidence are considered most valuable.

Second, Hoque points out that issuers rarely review cases manually. Outcomes depend a lot on fraud risk scoring algorithms, the cardholder’s dispute history, and your business’ chargeback history. Keep this in mind and tailor your evidence to fit the issuer’s automated evaluation process.

How to make the best case for your business

Hoque suggests a few steps you can take to increase your chances of reversing a chargeback during the representment process:

• Start early: The credit card chargeback timeframe can be tight for busy business owners, and it’s easy to fall behind. To avoid losing your case simply because time ran out, start gathering evidence as soon as you receive a chargeback notification.
• Provide as many details as possible: Rather than submit a generic receipt showing the customer’s purchase, provide a detailed report with as much information as possible. Ideally, your report should include the CVV confirmation, Address Verification Service match, and device ID for the purchase.
• Avoid getting emotional: A chargeback can feel like a personal attack on your business, but it’s best not to think of it that way. Make sure your response addresses the customer’s specific complaint and follows the card issuer’s guidelines.
• Create clear purchase policies: Having clear return and cancellation guidance on your business’ website is important. You can cite these policies in your report to the issuer to show that customers were made aware of them.
• Use photo proof of delivery: It’s easy for customers to claim that a package never arrived, and most card issuers don’t consider delivery confirmation from a tracking number to be sufficient evidence to the contrary. Photo proof of delivery is considered one of the strongest forms of evidence that an item reached your customer.