How Does a Chargeback happen?

We understand that chargeback is a way to address wronged customers, and try to get them their money back. But it is more elaborate than a refund. And as such there are more parties involved in this process too. So to understand the process of a chargeback, it is important to start with knowing the parties involved in the process.

Parties involved in a Chargeback

Cardholder

A cardholder is basically the customer, who has a card that has been issued to him by his bank. This is the protagonist in this scene. We start the process with him when he thinks he needs a chargeback.

Issuer

This basically the cardholders bank, who has issued him his card. They issues these cards on the behalf of card networks like Visa and Mastercard. The issuer is basically a middle man for the transaction carried out by the card network for the cardholder. It also maintains repayment and other processes for the card network.

Acquirer

The Acquirer is basically the merchant’s bank that maintains all it’s financial transactions, the way the issuer provides the same services to the cardholder.

Merchant

The merchant is the one supplying goods or services in exchange for funds. 

Card Networks

Card networks are companies like Visa and Mastercard, that act as the bridge between issuer banks and acquiring banks, as they are the center of carrying out these transactions, they provide secure transfer of funds from one party to another, through their systems.