First chargeback

A chargeback is a request to reverse a payment made to your business by the customer. The customer makes this request through their bank.

The chargeback process is used as a form of consumer protection to secure the customer's interest in wrongful transactions. This means a customer has the right to file a chargeback for a transaction if there is a valid reason to do so.

The first time a customer makes the request to have their money returned to their account for a particular transaction is referred to as a first chargeback.

A customer can request to have their money returned to their account for various reasons. Some of these reasons include:

• Value not received for said payment.

• Cancelled a subscription, but they were still charged.

• Cancelled the order but they didn't get a refund.

• The transaction was done without the knowledge of the account owner.

• Multiple payments were made.

After a customer makes this request, the customer’s bank reaches out to Paystack through the partners involved in processing the payment. Paystack then notifies you of the dispute via emails, notifications on your Paystack Dashboard, and via webhooks (if you integrated webhooks into your system). You are required to log in and resolve the dispute on your Paystack Dashboard or via the Dispute API.

Important to note

To ensure that you receive the notifications about first chargebacks and resolve them in time, it’s important that the dispute email addresses on your Paystack account are closely monitored email addresses for your business. We advise you to take a moment to review the email address(es) set as your Disputes Email.

To resolve a first chargeback, you must either decline or accept it.

You should accept a chargeback if the customer’s payment was successfully received, but the service or product the customer paid for was not provided.

This could be for several different reasons, including technical issues or human error. When the first chargeback is accepted, you allow for the funds to be deducted from your payout and reversed to the customer’s bank account. This helps resolve the chargeback.

You should decline chargebacks if the customer’s service or product were delivered successfully. To decline a chargeback, you must provide evidence, such as an invoice or a receipt. However, if the evidence does not contain sufficient information about the transaction and customer, the first chargeback will likely be reopened as a pre-arbitration chargeback. 

Kindly note that the chargeback will be automatically accepted on your behalf by not responding to chargebacks logged on your transactions within the timeline (16 hours for Nigerian businesses and 48 hours for South African, Ghanaian, and Kenyan businesses). This means that the customer will get a full refund at your expense.

After a chargeback is declined, the customer can have their bank reopen the chargeback if they are unsatisfied with the resolution. When a chargeback is reopened, it goes to a stage called pre-arbitration.