How does a chargeback work?
The cardholder contacts their issuer to contest a payment. The issuer raises a dispute through the card network, which debits the acquirer, which debits the merchant for the amount plus a dispute fee. The merchant can accept the loss or submit evidence. Stripe’s documentation gives typical timings: the merchant usually has 7 to 21 days to respond depending on the network, the issuer then has about 60 to 75 days to decide, and the whole cycle can take two to three months. Some networks start with an inquiry phase before a formal chargeback.
Why do chargebacks matter?
Each one costs the payment, the fee and the time to respond, and too many put the merchant into card scheme monitoring programs. As an illustrative example: a merchant with 50,000 card payments a month and 200 chargebacks has a ratio of 0.4%. At an average payment of 60 euros and a 15 euro fee, those disputes put 15,000 euros at stake in a month, even before any are lost or any monitoring fees apply.
What drives chargebacks, and what reduces them?
Stolen cards, customers who do not recognise the payment, customers who regret it, and slow refunds or deliveries. 3-D Secure shifts fraud liability in many cases, clear soft descriptors reduce unrecognised-transaction disputes, prompt refunds stop disputes before they start, and blocking cards linked to past chargebacks prevents repeat losses. Stripe’s data suggests that early fraud warnings turn into fraud disputes about 40% of the time when the payment is not refunded.
Where does Omno use it?
Chargebacks are handled between the PSP or acquirer and the merchant. Omno’s card blocking stops a card linked to a chargeback from being used again across the merchant’s brands, customer groups and customer verification levels keep risky segments on suitable providers, and transaction-level reporting supports monitoring per provider and merchant account.