What is a Chargeback?
A chargeback is a type of payment dispute started by a customer through their bank or credit card company. Instead of asking the merchant (Time4VPS) for a refund, the customer asks their financial institution to return the funds.
Chargebacks are designed to protect buyers from unauthorized or fraudulent charges, though they can occasionally be used incorrectly or stem from simple misunderstandings.
How Does a Chargeback Occur?
A chargeback usually unfolds through the following steps:
Customer Disputes the Transaction:
The cardholder contacts their bank to report an issue with the payment—such as an unauthorized charge, dissatisfaction with the service, or not recognizing the transaction.Bank Reviews the Claim:
The bank examines the customer’s complaint and may temporarily remove the funds from the merchant’s account while the investigation is underway.Merchant Provides Evidence:
Time4VPS can submit documentation to show the transaction was valid, such as invoices, account activity logs, or proof that the service was delivered.Bank Makes a Final Decision:
After reviewing all evidence, the bank either upholds the chargeback—refunding the customer—or reverses it, returning the funds to the merchant.
Why Are Chargebacks Harmful?
Chargebacks can create significant issues for both the merchant and the bank:
For Time4VPS:
Loss of revenue when payments are reversed.
Higher operational costs associated with handling disputes, the dispute costs 25 EUR.
Potential risk of account suspension by payment processors if chargeback rates rise too high.
Possible loss of customer accounts or services tied to disputed payments.
For Banks:
Increased administrative work required to investigate and resolve disputes.
Potential financial losses in cases of fraudulent chargebacks.
Strained relationships with merchants and payment processors due to frequent disputes.
What Happens When a Chargeback is Detected?
Once a chargeback is detected on an invoice, the following actions occur:
every dispute is investigated by our financial team and resolution depends on the situation.
Usually, we suspend the service and inform our client about the dispute. If we do not receive an answer within 24 hours, the service is terminated and we issue a refund through the bank and pay the dispute fee - 25 EUR. The account is closed or restricted (depends on the situation).
However, if we see that a client is violating our rights, we submit the review to check this case and win the case. However, client's service is restricted as well as the account.
If a client submitted a dispute by mistake and the service is already terminated, we can activate the service (if it is possible) and ask to pay for the service and dispute fee (25 EUR). However, we take the right to not do this if we see that a client is a fraud and etc.
We kindly ask our clients to contact us before submitting a dispute case regarding any payments, so our financial team can review and help.