Can users request a chargeback with Open Banking?

What is a chargeback?

A chargeback is a return of money to a payer of a transaction. When using a card, in the event of a purchase dispute where the merchant refuses to refund, the payer can ask the card issuer for a refund, known as a “chargeback”.

Why is “no chargebacks”  a better option?


Chargebacks are a costly affair for merchants. The toll behind chargebacks is not only monetary but includes operational costs. When a chargeback occurs, the merchant will need to reimburse the transaction as well as pay a fee to the acquiring bank. Additionally, the buyer is not obliged to return the purchased goods, which translates into additional loss in revenue.  

Can be fraudulent

Unfortunately, not all chargeback claims are made in good faith. Chargeback fraud has increased drastically in the last year. According to Chargebacks911 2022 field report, approximately two-thirds of merchants reported a rise in this type of fraud over the past three years, with an average increase of 28 per cent.  

Damage customer relationships

Chargeback should be a last resort for consumers, something to rely on when there is no resolution between the parties. To create loyal customers, a merchant should deal with disputes internally and promptly to ensure a good customer experience without relying on costly card protection.

Are buyers still protected?

Buyers are protected for all purchases regardless of the payment method used. They are entitled to a certain set of rights under The Consumer Rights Act 2015 and can address any concerns to Citizen's Advice. In addition, consumers are also protected when a payment goes wrong under the Payment Services Regulations 2017 (PSRs). The PSRs provide legal protections for wrongly executed payments, for instance, if something has gone wrong with the payment, and it was the bank’s fault, the PSU is entitled to a refund from the bank.

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