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Guide to chargebacks

What is the chargeback process?

If a cardholder sees a transaction on their credit card that they have not made, or if they were charged an incorrect amount, they can dispute that transaction with their bank or financial institution. If the cardholder’s bank feels the dispute is valid, the transaction in dispute is reversed from your merchant account and refunded to the cardholder. This process, and ultimately the reversal of the payment is called a chargeback.

How does the chargeback process work?

Step 1. A dispute is raised by a cardholder.

A cardholder may see a transaction on their statement that they do not recognise and raise a dispute with their bank.

What about chargebacks related to fraud?

A cardholder’s bank can make a fraud chargeback on a transaction if, for example the:

  • transaction is illegal or prohibited
  • customer did not authorise the transaction
  • customer says they are not liable for the transaction
  • authorisation for the transaction is declined.

The process for fraud related chargebacks is slightly different to the typical chargeback process. 


Step 1. A fraud chargeback is automatically debited from your account. 

Step 2. You will receive a notification (via letter and/or email*) that your account has been debited. 

Step 3. You’ll have a chance to dispute the fraudulent chargeback by following the process outlined in the notification.

Why do chargebacks occur?

Here are some of the common reasons for chargebacks.

  • A customer doesn’t recognise the transaction
  • A transaction was fraudulent
  • A transaction was processed more than once
  • The incorrect amount was charged
  • The goods or services have not been received 
  • A credit or refund was not processed 
  • A sales receipt was changed without the customer’s authorisation
  • Transaction amount was above your floor limit, but no authorisation was obtained.

How can I prevent chargebacks from occurring?

There are a few things you can do to help reduce the risk of chargeback requests:


  • Follow the rules. Always follow the terms of your merchant agreement for processing transactions and retain proof for all transactions.
  • Keep detailed records. Keep detailed records showing that your customer has received the goods and services they paid for.
  • Get a delivery receipt. Always deliver goods or services as advertised and get a confirmation that goods were received by the actual cardholder.
  • Reduce refund fraud. Only refund to the same card that was used to make the purchase. Do not refund with cash or cheque if a purchase was made on a card. 
  • Use a familiar name. Use a business or company name that is recognised by your customers – and matches the name on your transaction receipts.
  • Promptly resolve disputes. Be proactive and communicate clearly with your customers when there is an issue.

Chargeback FAQs

If a chargeback case has been raised against your business, do not process a refund to your customer. If you process a refund during the time a chargeback case is open, you may still be liable for the chargeback. After the case is reviewed, if a refund is required, it will be processed through the chargeback process.

Things you should know

*We will email you where we hold a valid email address for you. A condition of your merchant facility is to provide Westpac with a valid email address.