Chargebacks occur if cardholders or their bank object to a transaction. The reasons for such objections are manifold; some of them are “non-delivery of goods”, “credit not processed”, “item not as described” or “cardholder does not recognise” a legitimate transaction. In most cases, however, chargebacks are caused by card abuse, particularly in e-commerce.

In case of a chargeback the card issuer asks that the initial payment transaction be charged back. The merchant may then examine the case and object to the chargeback. As the chargeback will usually be at the expense of the merchant, merchants obviously have good reason to want to avoid chargebacks and minimise chargeback-related expenses, such as:

• direct losses from chargebacks,
• increased staff expenses for customer relations and the processing of objections,
• investment and system expenses related to chargeback processing and
• fees and penalties of the card organisations (MasterCard and Visa).

In order to identify adequate measures to prevent chargebacks it is vital to analyse a merchant’s business model as well as the related chargeback patterns and other fraud risks and to evaluate them together with the merchant. Beyond [fraud-protection measures], [dynamic transaction references] may, for example, help to reduce unnecessary chargebacks of legitimate transactions. If chargebacks occur nevertheless, Deutsche Card Services permits quick and easy processing thanks to online-based tools.