A chargeback occurs when a cardholder disputes a transaction, prompting their bank to reverse the payment and return funds to the customer. This process is designed to protect consumers from unauthorized or fraudulent charges, billing errors, or goods and services not received as promised. While chargebacks offer important safeguards for buyers, they can be costly and risky for merchants, who may lose both the sale and incur additional fees. Excessive chargebacks can also damage a business’s reputation and lead to higher processing costs or even loss of payment processing privileges.