What a chargeback is
A chargeback is a forced reversal initiated by the cardholder bank when a customer disputes a charge. Unlike a refund you choose to issue, a chargeback is imposed on you and follows a defined dispute lifecycle with deadlines.
The dispute lifecycle
The flow moves through stages. A dispute is opened, the merchant may submit evidence to contest it, and the issuer then decides. Each stage has a strict response deadline that, if missed, forfeits the case.
Ledger impact
When a chargeback lands, you post a reversal that removes the original revenue and often a separate fee. If you win the dispute, you post another entry restoring the funds.
Operational guidance
- Track each dispute deadline so responses are never missed.
- Post the chargeback reversal and any fee as explicit ledger entries.
- Keep evidence linked to the original transaction reference.
Key idea
A chargeback is a bank initiated reversal with deadlines, and each stage maps to explicit ledger entries.