A chargeback is a request for the reversal of 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.
Why would a customer file a first chargeback?
Customers can request to have their money returned to their account for a variety of reasons. Some of these reasons include:
- Value not received for said payment
- Canceled subscription but they were still charged
- Canceled 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 to your system). You are required to log in and resolve the dispute on your Paystack Dashboard or via the Dispute API.
💡 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 of your business. Please take a moment to review the email address(es) set as your Disputes Email.
Resolving first chargebacks
To resolve a first chargeback, you need to either decline or accept it.
Accepting a chargeback - 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.
Declining a chargeback - you should decline chargebacks if the customer’s service or product was delivered successfully. To decline a chargeback, you need to 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 is very likely to be reopened as a pre-arbitration chargeback. You can find more information on how to resolve chargebacks from your Dashboard here.
Kindly note that by not responding to chargebacks filed for your transactions within the timeline (16 hours for NG merchants, and 48 hours for SA and GH merchants), the chargeback will get automatically accepted on your behalf. This means that the customer will get a full refund at your expense.
After a chargeback is declined, the customer has the right to have their bank reopen the chargeback if they are not satisfied with the resolution. When a chargeback is reopened, it goes to a stage called pre-arbitration. There is detailed information on what the pre-arbitration stage is about here.