Chargeback
A chargeback is a transaction reversal raised by the cardholder or initiated by a cardholder’s issuing bank, typically due to suspected fraud, disputes, or processing errors. Chargebacks serve as a consumer protection mechanism but can create financial and administrative burdens for merchants, as while cardholders must attempt to resolve the issue with the merchant before raising the chargeback the mechanism can be abused through Chargeback Fraud, where despite goods or services being received a chargeback is still raised and funds returned to the customer.
Applications
E-commerce:
Reduces fraud in online card payments by verifying the cardholder's identity
E-commerce:
Reduces fraud in online card payments by verifying the cardholder's identity
Advantages
- Enhanced security: Reduces unauthorised transactions by verifying that the genuine account holder is authorising the payment
- Enhanced security: Reduces unauthorised transactions by verifying that the genuine account holder is authorising the payment
Challenges
- User Experience: Additional authentication steps can cause friction and increase checkout abandonment
- User Experience: Additional authentication steps can cause friction and increase checkout abandonment
