What is a Chargeback?

Definition: A reversal of a card payment initiated by the cardholder via their bank (issuer) after a dispute-often because of alleged fraud, non‑recognition, or dissatisfaction.

How it works (simplified):

Player disputes a card transaction with their bank.
The transaction amount is temporarily debited from the merchant.
The merchant/PSP can represent (contest) the chargeback with evidence.
The bank/card network decides the outcome.

Why it matters to operators:

Chargebacks can cause financial losses (returned funds + fees).
Excessive chargeback ratios can lead to higher processing costs or even loss of card processing.

Common chargeback reasons in gambling:

“I didn’t authorize this” (friendly fraud or actual fraud).
“I don’t recognize the merchant name” (descriptor confusion).
Disputes related to promotions/terms misunderstandings.

Typical prevention/mitigation:

Clear billing descriptors and receipts.
Strong authentication (e.g., 3DS where applicable).
Robust KYC, device fingerprinting, and behavioral checks.
Clear Terms & Conditions and transparent promotion rules.

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Related Terms

Source of Funds / Source of Wealth

Source of funds (SoF) is the origin of the money a player uses for deposits. Source of wealth (SoW) is how the player built up their overall wealth.

Customer Due Diligence (CDD / EDD)

Customer due diligence (CDD) is the set of checks an operator carries out to know who the player is and assess their risk level. Enhanced due diligence (EDD) is a deeper level of checks for higher-risk cases.

Transaction Monitoring

Transaction monitoring is the automated review of player payments and betting activity against rules and thresholds to detect activity that needs a closer look, such as possible money laundering or fraud.

Open Banking

Open banking is a way of sharing bank data and starting payments through secure bank APIs, with the account holder’s consent. In iGaming it is used for account-to-account (A2A) deposits and payouts.

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