What constitutes a chargeback?

A chargeback is when a customer disputes a credit card or online payment transaction with their cardholder and wants the bank to reverse the transaction. Instead of going through the restaurant for a refund, the customer calls the credit card issuer or bank and reports an issue with the transaction.

These situations can lead to a chargeback:

• Restaurants using credit cards or debit cards
• Ordering food from restaurants online
• Paying for delivery orders
• Restaurant accepting payments through mobile wallets
• Contactless payments

How does a restaurant chargeback work?

Typically, a chargeback procedure follows this process:

• A consumer makes an order at the restaurant, online, or has it delivered.
• The bank card transactions have been authorized through the POS system of the restaurant.
• A customer later on files a dispute and claim with the bank regarding the transaction.
• The payment is then reversed to the customer.
• The merchant might be requested to send copies and proofs of the transaction to verify the dispute.
• The dispute will be resolved by the bank with either the chargeback claim granted or rejected.

If there isn't enough evidence that can be proven by the merchant, the claim for a chargeback is granted. The business might lose its revenue and will be charged an additional fee for the chargeback.