# The Beginner’s Guide to Credit Card Chargebacks
Credit cards have come a long way since their inception in the 1970s when they lacked regulation and experienced minimal usage. Today, credit cards represent a government and bank-backed promise that any recorded debt accrued will be paid in due time, allowing for the implementation of a small percentage of interest, known as credit card chargebacks. In this guide, we will explore the hidden aspects of chargebacks, when customers can request them and the consequences for both parties.
## The Hidden Aspects of Chargebacks
While the concept of credit card chargebacks may seem simple, there are many clear yet hidden aspects that fly under the radar of the casual credit card user’s (often) unwatchful eye. Payment disputes from criminal activity, for example, cost merchants approximately 20 billion in 2021, a nearly 20% increase from 2020. The increase likely exists from the rapid growth of eCommerce, a market that sees itself growing to a total of 22% of the total retail market as of 2022, covering nearly a third of the market by 2026. In keeping with these trends is the industry’s growth, with the 2020 brand-to-consumer (B2C) eCommerce market currently sitting at 4.01 trillion, a .34 increase since the space’s 3.67 trillion estimations in 2020.
## When Can Customers Request Credit Card Chargebacks?
In many cases, customers are well within their rights as a buyer to request a chargeback if given proper credence. Here are several options when a chargeback is an appropriate course of action:
– Unauthorized charges or fraud
– Additional, unwarranted charges
– Damaged or defective orders
– Order never delivers
## But Think Before Ordering a Chargeback
However, on the other hand, customers should be wary of ordering a chargeback. On the business end, a chargeback can cause a business anywhere from $20-$100 in administrative fees. Even if the chargeback is later canceled, the fees remain to cover the administrative cost solely at the businesses’ expense. If chargebacks occur to the point they exceed a predetermined threshold, the business will be fined anywhere around $10,000. Wherein, if the business spends a significant amount of time over this threshold, the bank will likely revoke their account.
### Consequences for Merchants
Furthermore, merchants stand to lose over a 200% profit minimum on a non-returned item. The additional funds on the business may raise prices, which in the particular niche eCommerce space provides a loss for everybody.
### Consequences for Customers
On the customer end, many stand to gain headaches and hassle while losing additional funds and most of all time. Especially in cases where they either have to return or attempt to track down a package. In some cases, the cardholder’s account closes with ramifications on their credit score.
## Final Thoughts
It is important that integrity “lies” with both parties in the matter. Both stand to lose significant investments of time, money, and opportunity. There needs to be trust integral to the commercial bastion. If neither side tries to game the system, much of this mess can be avoided, and if an occurrence does happen to poke its head, both parties can then know it was all an earnest mistake.
In summary, credit card chargebacks are a necessary aspect of modern commerce, but both customers and merchants need to understand their rights and responsibilities. Customers should think carefully before ordering a chargeback, while merchants should be aware of the consequences of excessive chargebacks. Ultimately, trust, communication, and transparency are key to a healthy and sustainable commercial relationship.