Your rights when paying by credit cardChargeback on credit and Visa debit cards

What is chargeback?

Chargeback is a process that allows you to reverse a transaction if you are unhappy with the item received or if your credit or Visa debit card has been used fraudulently.

Chargeback is not enshrined in law like section 75, but is part of the Visa Scheme Rules, which participating banks subscribe to. It applies to all Visa debit cards, and can also be used for Visa credit card purchases where section 75 is not applicable – for goods costing less than £100 for instance. It also covers prepaid Visa cards and Visa Electron purchases.

MasterCard operates an equivalent scheme, but this only applies to MasterCard credit card payments, not to purchases made with a Maestro debit card. American Express does not offer a chargeback scheme.

When can chargeback be used?

Like section 75, chargeback can be used in cases of goods not arriving, arriving damaged, arriving not as described, or where the merchant has ceased trading.

Claims must be addressed to the bank that provides your Visa debit card or your credit card, which in turn will put in a request to the merchant’s bank. As a result, you should still get your money back from the merchant's bank, even if the merchant has ceased to trade.

Conditions and requirements of chargeback

The main requirement for compensation is evidence that there has been a breach of contract.

There is also a 120-day time limit on claims. This time limit starts from the day you are aware of a problem. In the case of tangible goods that you've purchased from a shop or online it would therefore be from the day you receive the items. In the case of something like flights, with an airline that goes out of business for example, it would be from the day the flight was due to depart.

Chargeback troubleshooting

If you have any trouble when putting in a claim to your credit or Visa debit card provider, try asking to speak to a supervisor. Chargeback is less well-known than section 75, and some bank staff may not be aware of this rule.

If your card provider rejects your chargeback claim, you can take your case to the Financial Ombudsman Service within six months of your final correspondence.

PayPal and chargeback

Although payments made through online payment systems such as PayPal are not covered by section 75, they should be covered by the chargeback rules, so it's worth putting in a claim.

When you make a purchase using PayPal, your PayPal account usually takes a corresponding amount from your current account to pay for it, making it easy to track the link between a purchase and its associated payment. 

However, if you tend to keep cash in your PayPal account (for example if you've sold an item recently), PayPal will use this money to pay for new purchases, rather than taking it from your bank account. This could make it more difficult to establish the link between the purchase and the payment, although it's still worth putting in a claim, for example if you've missed the eBay and PayPal complaint deadlines or you're not happy with the outcome.

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