Chargeback insurance refers to insurance

Insurance

In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 coverage protects merchants who accepts credit cards. The coverage protects the merchant against fraud

Credit card fraud

Credit card fraud is a wide-ranging term for theft and fraud committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account. Credit card fraud is also...

 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

Bank

A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

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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

Payment gateway

A payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets...

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