A chargeback occurs when a consumer or bank disputes a credit card transaction approved by a merchant, often due to fraud, and the merchant must return the value of the charge to the bank that issued payment. Typically, merchants also pay a fee or multiple fees when a chargeback is processed.
For each chargeback, the issuing bank – the bank that issued funds to cover the cardholder’s charge – provides a chargeback code to the merchant.
This numeric chargeback code corresponds with a description of the issue with the payment: Fraud, identity theft, insufficient funds, data mismatch, customer dissatisfaction, etc.