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Definition
A chargeback is a payment reversal initiated by a cardholder’s issuing bank after a disputed card transaction. It allows funds to be returned to the cardholder when a transaction is believed to be unauthorized, fraudulent, or not delivered as expected.

Why it matters
Chargebacks protect consumers from fraud and merchant misconduct, but they can also create financial losses, fees, and operational challenges for businesses. Excessive chargebacks may lead to penalties or restrictions from payment processors.

Example use case
A customer notices an unfamiliar purchase on their credit card statement and disputes it with their bank. The bank investigates and issues a chargeback to reverse the transaction.