Chargeback

A chargeback is what happens when a cardholder disputes a charge with their own bank (the "issuing bank"), and the issuing bank, not the merchant, forcibly pulls the disputed funds back from the merchant's account while the dispute is investigated. It is fundamentally different from a refund: a refund is the merchant's own voluntary choice to return money; a chargeback is imposed on the merchant by the payment system itself, usually with an automatic fee attached regardless of how the dispute is ultimately resolved.

Card networks group chargeback reasons into two broad buckets. Fraud-coded disputes are where the cardholder claims they never authorized the transaction at all, someone else used their card. Non-fraud, service-coded disputes cover everything else: the item never arrived, it didn't match its description, the merchant billed twice, or a subscription the cardholder thought they'd cancelled kept charging. A merchant can contest a chargeback by submitting evidence, a signed delivery receipt, a matching IP address, prior correspondence, through a process each card network defines on its own terms (Visa's "Compelling Evidence" rule updates, for instance, have periodically tightened what counts as sufficient proof for certain reason codes).

The messiest category, and the one that connects most directly to First-Party Fraud (see that entry), is when the cardholder genuinely made the purchase, genuinely received the goods, and disputes the charge anyway, falsely claiming fraud or non-delivery to get a free refund while keeping what they bought. Card networks and merchants often call this "friendly fraud," and it's structurally hard to catch with identity verification alone, because the person disputing the charge really is who they claim to be: the fraud is in the false claim, not in a stolen identity.

Who actually built this

The legal foundation, at least in the United States, is the Fair Credit Billing Act of 1974, which created a cardholder's statutory right to dispute billing errors and unauthorized charges. The card networks, Visa, Mastercard, American Express, Discover, built the actual chargeback mechanism as their own operational rulebook on top of that right, and extended it well past the statute's original scope into an entire reason-code taxonomy and arbitration system each network runs independently. None of this is government-standardized across networks, and none of it is Solidus's design.

Solidus today

Solidus does not process payments, is not a card network, acquirer, or issuer, and has no chargeback-management or dispute-resolution product of any kind, this isn't a gap on a roadmap, it's outside what Solidus builds. The only mention of chargebacks anywhere in Solidus's own internal materials is a single unbuilt idea for the also-unbuilt Solidus Pay product: a "Verified-Payer" trust mark that a merchant could point to as evidence the payer was credential-authenticated, on the unproven theory that this correlates with fewer disputes. No design partner has ever instrumented a real chargeback-rate baseline against a Solidus credential, and Solidus's own materials describe the idea as an unproven assertion, stated that plainly.

See also

Account Takeover (ATO) is a distinct fraud category that can lead to fraud-coded chargebacks when a stolen account is used to make unauthorized purchases. First-Party Fraud is the category "friendly fraud" chargebacks fall under, disputes filed by the genuine cardholder in bad faith. Synthetic Identity Fraud is a related but distinct fraud category targeting account creation rather than an existing account's transactions. KYC is the identity check that, by design, has no bearing on any of the dispute categories above once an account is genuinely and correctly verified.