how come credit card bills can be refunded, i.e if you get scammed the credit card company can reverse the transaction but a bank transaction cannot be reversed?
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Lots of people have explained but not exactly the reason that bank account transactions are not as reversible.
Lets start with a baseline assumption. The bank is NOT the one who is left holding the bag at the end of all this. What I mean by that is this. If you have a credit card issued by chase, and you request a chargeback and they do so. That money did not come out of Chase’s pocket.
Every time you buy something by credit card, the opposite side of that transaction is a merchant. That merchant has a company that they work with known as a payments processor and the contract between the payments processor and the merchant is known as a merchant agreement.
Charge backs are AWLAYS payed for by the merchant. If you spot a fraudulent charge you report it to your bank/credit card company. There are investigations but if you get that money back it’s because it came out of the pocket of the merchant. It’s NEVER the bank that pays for that transaction refund.
And that’s key. The merchant agreement allows them to do this. Even if I (the merchant) took the deposit from that sale and immediately moved it to another bank account, the merchant agreement would just take the chargeback out of tomorrow’s sales deposit, since there’s transactions going between the merchant and the payment processor every day, the processor can always deduct a chargeback from my next deposit.
It’s the same deal if you pay for something with a debit card. BUT, if you do some kind of bank to bank transfer (as scammers often get you to do) it’s another story entirelly.
If you transfer money, it just goes into another bank account. There’s no payment processor involved, no merchant agreement and more importantly no string of future transactions to squeeze the money out of.
If the bank is able to reverse the transaction, they will do so. But if the bank account that the money got deposited into has been emptied, then no one is able to reverse that.
And this is the real key. Since the banks are NEVER the ones who are left holding the bag, they say that there’s nothing they can do. Chargebacks don’t come out of the bank’s pocket, nothing comes out of the bank’s pocket. If the bank can get the money back, they will but with a credit card they are able to take the money out of future deposits, it’s not the case with a fraudulent transfer. The bank never approves a chargeback if there’s no pocket that they can reach in and take the money out of. They never reach into their own pocket.
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