Chargeback insurance refers to insurance coverage protects merchants who accepts credit cards. The coverage protects the merchant against fraud in a transaction where the use of the credit card was unauthorized, and covers claims arising out of the merchant’s liability to the service bank.
This coverage can apply under a number of circumstances, including:
- A credit card is lost or stolen and used before the cardholder can report it
- Credit Card Number Generators or Counterfeit Plastic Cards
- Post-purchase "ship to" information changes
- Signature mismatch or signature not on file.
Merchants are reimbursed for:
- The cost of a stolen product or service
- The loss of profit
A typical chargeback insurance policy will only cover losses on credit card transactions purchased through its own specific credit card processor or payment gateway.
