You purchase a product, but it doesn’t work or you don’t even get it. So you open a chargeback. How are banks able to just claw back the money you’ve sent?
In: Economics
Oddly, nobody has mentioned the reserve. Many merchants, especially high risk merchants, will have a reserve of about 5-10% (or more if a business is notably sketchy) of their transactions that the bank holds in reserve, sometimes for fairly long periods like 6-12 months. That way even if the merchant stops doing business entirely, there’s a pool of funds that chargebacks can be debited from as complaints roll in.
Latest Answers