> For the complete documentation index, see [llms.txt](https://docs.xft.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xft.finance/learn/flows/payments/credit-card/chargebacks.md). # Chargebacks * CHARGEBACK = TXN REVERSAL * DEBIT ACQUIRER (MERCHANT) * CREDIT ISSUER (CUSTOMER) Chargebacks occur when a cardholder exercises his or her rights to a payment reversal under certain conditions, after efforts to achieve resolution directly with the merchant have failed. A chargeback creates a debit position for the acquirer (merchant) and a credit for the issuer \ (cardholder) is a chargeback. *** For acquiring banks, most of their merchants’ activity will be credit transactions; i.e., they will generate an incoming flow of funds through the settlement process. But merchants will also conduct transactions, such as refunds and returns, which create debits to the merchant (but credits to the cardholder, as explained in the previous paragraph). These debits will be deducted from the total of funds owed to the acquirer, and the net amount will be deposited to the acquiring bank’s account through settlement. Another activity that creates a debit position for the acquirer (merchant) and a credit for the issuer \ (cardholder) is a chargeback. Chargebacks occur when a cardholder exercises his or her rights to a payment reversal under certain conditions, after efforts to achieve resolution directly with the merchant have failed. There are time limits for exercising these rights, and not every cause of dissatisfaction is an allowable reason for entering a dispute. Some of the permissible reasons include duplicate processing, i.e., the merchant processed the same transaction more than once; the merchandise was defective or not as described; the goods or services were not received; or a biller continues to submit drafts for a canceled recurring payment. The network plays an intermediary role in chargeback processing. Disputes are submitted to the \ network by the cardholder’s issuing bank and routed to the merchant’s acquiring bank. There are rules and time frames established for both parties to the dispute, which are mediated by the network. The merchant may have the ability to re-present the chargeback to the network through its acquiring bank. If the chargeback is resolved in the merchant’s favor, no settlement activity is required. However, if the chargeback is resolved in the cardholder’s favor, the network will debit the amount of the transaction from the acquirer’s net settlement and process a credit of the same amount to the issuer’s net settlement. *** RESOURCES