A chargeback occurs when a card holder disputes a credit card transaction with his or her credit card issuer. The card issuer initiates a chargeback against the merchant account applicant. The amount of the disputed transaction is immediately withdrawn from the merchant's bank account, and the merchant has 10 days in which to dispute the chargeback with proof of purchase, signature, proof of delivery, etc. A chargeback fee is usually assessed to the merchant on top of the actual transaction.
A chargeback may be initiated for a number of reasons including, duplicate processing - a client is charged twice for the one transaction, fraudulent transaction - a credit card is used without proper consent or authorization or if they client does not receive the item they paid for.