Why is the chargeback amount different from the transaction amount?

The chargeback amount can deviate from the transaction amount due to various reasons:

  • The card issuing billing currency 
  • Merchant primary settlement currency  
  • Scheme settlement currency

When a transaction is completed, the merchant is settled in their primary settlement currency and the cardholder is debited in the billing currency of their bank (often this is the local/ national currency). 

If the transaction is charged back, the issuing bank will exercise the chargeback in their local/ national currency, which is subsequently converted by the credit card scheme to either EUR, USD or a local currency for domestic transactions, e.g. GBP. 

As the chargeback is always exercised after the transaction date, the amount is converted according to the conversion rate of that day. The difference in amount is caused by this conversion. 

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