Resource Center

What is a chargeback and how to respond

At Pepper Pay, we’re here to help you navigate disputes confidently. One of the most important — and often misunderstood — parts of payment processing is the chargeback process.

Here’s what you need to know about what a chargeback is, why it happens, and how to respond effectively

What Is a Chargeback?

A chargeback occurs when a customer disputes a transaction with their card-issuing bank. Instead of contacting you directly for a refund, they ask their bank to reverse the charge — which pulls the funds back from your account temporarily or permanently.

The purpose of chargebacks is to protect consumers from fraud or unauthorized activity. However, not all chargebacks are legitimate — many are the result of misunderstandings, duplicate charges, or misuse of the dispute process (commonly called "friendly fraud").

Common Reasons for Chargebacks

  • Fraudulent transaction (cardholder claims they didn’t authorize the charge)
  • Unrecognized charge on the customer’s bank statement
  • Product or service not received
  • Quality dispute (item was defective, not as described)
  • Duplicate transaction
  • Canceled subscription or service still billed

How the Chargeback Process Works

  1. Customer files a dispute with their bank
  2. The issuing bank investigates the claim and temporarily pulls funds from your account
  3. Pepper Pay notifies you via email and/or merchant portal
  4. You have a limited time (typically 7-10 business days) to respond
  5. The card network (Visa, Mastercard, etc.) reviews your documentation
  6. Final decision is made:
    • Win: Funds are returned to you
    • Loss: Funds are permanently deducted

If you’re enrolled in real-time dispute tools (like Verifi, Ethoca or RDR), you may have a chance to resolve the dispute before it becomes a formal chargeback.

How to Respond to a Chargeback

If you believe the charge is valid, you can submit evidence to fight the chargeback. This process is also known as “representment.”

Your response should include:

  • A copy of the receipt or invoice
  • Proof of delivery, tracking, or customer acknowledgment
  • Any correspondence with the customer (e.g., emails or support tickets)
  • Clear refund or return policy, if applicable
  • Screenshots or logs (for digital services)

Best Practices to Prevent Chargebacks

  • Use recognizable billing descriptors
  • Provide clear refund and return policies
  • Require signature or delivery confirmation for physical goods
  • Use AVS (Address Verification) and CVV checks for online sales
  • Respond quickly to customer complaints before they escalate to a dispute

Important

Chargebacks are time-sensitive. If you miss the response deadline, the case is automatically closed in favor of the cardholder — even if the dispute was invalid.

Need Help?

Pepper Pay’s support team is here to assist you in understanding chargeback reason codes, gathering supporting documents, and submitting responses on time. If you're frequently seeing chargebacks, we can also help you review your payment setup or activate fraud protection tools.

support@pepperpay.com; 786-358-9338 option 3