Chargeback

What is a chargeback

A chargeback is a process where a cardholder asks their bank for a refund for a transaction they do not agree with. This process cannot be used for bank transfers between accounts – it only applies to card payments.

A cardholder usually resorts to a chargeback when they have been unable to resolve a complaint in any other way. It is an escalated step taken through their bank. Therefore, a chargeback is a service provided by banks to their customers.

If a merchant accepts card payments via a payment gateway or payment terminals, they are subject to the rules and requirements of the card payment system, including the rules of card issuers (e.g., Visa and Mastercard). According to Comgate’s terms and conditions, the merchant bears the consequences of chargebacks and fees related to payment disputes and is required to provide the necessary cooperation.

In this process, Comgate tries to defend the interests of the merchant (its client), while the cardholder's bank tries to defend the interests of the cardholder (its customer).

To properly defend your rights, we will request from you, in particular (but not limited to), documents proving the existence of the order, its fulfilment, and communication with the customer. The more complete and accurate the cooperation we receive from you, the better we can defend your position in the complaint procedure.

When can a customer use a chargeback?

The most common reasons for a chargeback include:

• The customer claims they did not authorise the transaction or does not recognise it.

• The goods/service were not delivered.

• The delivered goods were different or defective, and the merchant is not communicating.

• Duplicate charging of a transaction.

• A different amount was incorrectly charged.

• The customer disputes a "subscription" in the case of recurring payments.

• The merchant did not issue a promised refund.

How a chargeback works

1. Filing a chargeback

• The customer files a complaint with their bank.

• The cardholder's bank initiates the chargeback and requests a refund from Comgate through the card association.

• Comgate requests the merchant to provide evidence that the refund request is not justified.

2. Merchant's defence

• The merchant provides Comgate with the necessary documents (proof of delivery, communication, complaint records, etc.).

• Comgate sends a response to the cardholder's bank via the card association.

3. Pre-arbitration

• The cardholder's bank can then confirm Comgate's defence or, if they are not satisfied or convinced, proceed to pre-arbitration.

• Comgate can respond with a further defence and pass it back to the cardholder's bank.

• Following agreement with the merchant, Comgate may accept the cardholder's bank's decision in pre-arbitration and accept the chargeback. This avoids further escalation of the dispute and the associated fees.

  • A chargeback occurs = The disputed amount + a chargeback fee according to the valid Comgate price list is deducted from the merchant's incoming transactions.

4. Filing for arbitration

• If the dispute is still not resolved after pre-arbitration, the cardholder's bank may request arbitration from the card association (Visa, Mastercard).

• Arbitration is a formal dispute resolution process where the association decides based on the evidence presented.

• Arbitration is subject to a fee.

5. Arbitration decision

• The card association examines all documentation from both parties.

• It issues a decision on who is right (the customer or the merchant).

• This decision is binding, and funds are allocated accordingly.

6. Dispute settlement

• If the card association decides the arbitration in favour of the merchant, the payment remains with the merchant. No fees are charged.

• If the card association decides the arbitration in favour of the customer, the money is permanently returned to the cardholder.

• Dispute settlement occurs: The disputed amount is returned from the merchant's incoming transactions + arbitration fees are deducted.

• Costs for losing an arbitration proceeding for Comgate:

  • Mastercard arbitration: approx. 500 EUR

  • Visa arbitration: approx. 600 EUR

Tips on how to prevent chargebacks

1. Document every order and delivery

• Use carriers that allow shipment tracking and have proof of delivery (ideally with a signature or photo).

• Archive this evidence for at least several months.

2. Communicate quickly and transparently

• Respond to customer queries as soon as possible.

• If a problem arises (delay, damage), resolve it helpfully so the customer does not go straight to the bank.

3. Clear terms and conditions

• Ensure the customer clearly sees the terms of purchase, cancellation, and returns.

• Include them directly in the order confirmation or invoice.