What is a chargeback?

A chargeback refers specifically to the process in which a transaction amount is returned to the cardholder by their bank, typically as a result of a dispute. This can occur if the customer disputes a charge for various reasons such as unauthorized use of their card, dissatisfaction with the service, or failure of the merchant (in this case, the rental company) to deliver the service as promised.

When a chargeback is initiated, the bank takes the funds back from the rental company and refunds the customer. This process serves as a way to protect consumers from wrongful charges and ensure they maintain control over their financial transactions. Understanding the chargeback process is crucial for businesses, including rental car agencies, to manage financial disputes efficiently.

In contrast, a refund issued to a customer might not involve any dispute and is typically a voluntary act by the company. Payment received after a rental pertains to the revenue generation process, while a penalty fee for late returns involves a separate aspect of the rental agreement and customer compliance.