Your rights when paying by credit card Chargeback on credit and debit cards

Chargeback may be possible where section 75 doesn't apply, for example for items of £100 or under, or debit card purchases

Please note: This guide refers to the chargeback process available to consumers, rather than traders. If you are a trader or self-employed, read our free guide to tax for the self-employed.

How does chargeback work?

Chargeback is a process that allows you ask your card provider to reverse a card transaction if there is a problem with goods you have purchased..

Chargeback is not enshrined in law like section 75, but is part of Scheme Rules, which participating banks subscribe to. It applies to all debit cards, although exact rules may vary between the Visa, Maestro and American Express networks.

Chargeback also applies to credit cards and is particularly useful where section 75 is not applicable – for goods costing less than £100 for instance.

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; but it does not create joint liability on the card company in the way that Section 75 does. 

You can ask your card provider to try to recover the money you paid or part of it (if for example you ordered two items but only one arrived), you couldn't though claim back the cost of fixing a faulty item.

Claims must be addressed to the bank that provides your debit card or your credit card, which in turn will put in a request to the merchant's bank. As a result, you could still get your money back from the merchant's bank if the money is there to be recovered. However, there are no guarantees that your bank will be able to recover the money through chargeback.

Conditions and requirements of chargeback

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

There is also a time limit on claims - Visa, for example, sets a 120 day time limit which 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. 

If booking flights, should the airline go out of business, the breach of contract would be from the day the flight was due to depart. However, if  airline had told you at an earlier date that the flight would not be going ahead, the conditions would not apply.

Chargeback troubleshooting

If you have any trouble when putting in a claim to your credit or 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

Watch out if you use your credit or debit card to load money into your PayPal, or other online payment account as it is the loading of the money that is considered to be the card transaction.

If anything goes wrong with the loading of your account, you could use the chargeback rules. However, if the money that you load into your account is then subsequently used to buy goods and services, that transaction is not classed as a card transaction and is unlikely to be covered by chargeback.

If you want to ensure that chargeback will apply to a PayPal transaction, it's best to empty your PayPal account regularly so there is no credit balance. That way, when you make a purchase using PayPal the same amount will be debited from your bank account or credit card at the same moment you pay, making it easier for your bank or credit card provider to match the purchase with the debit.