Where do bank companies get the money disputed from unauthorized credit card transactions? Do they pay it from their own pockets or chase the persons behind the transaction?

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Where do bank companies get the money disputed from unauthorized credit card transactions? Do they pay it from their own pockets or chase the persons behind the transaction?

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If you dispute a charge from Fred’s Pizza, the bank applies a chargeback to the Fred’s Pizza account. Merchant accounts have specific terms for handling chargebacks, and the merchant pays higher fees if they have chargebacks above a certain level.

The bank pays in some fraud cases, when Fred’s Pizza goes out of business or is a scam. However, that’s not typically the case.

Usually the merchant doesn’t get paid for the transaction. Especially if it is a card not present transaction (online or phone) or signed credit card. It’s harder to dispute a chip and pin transaction and claim it was somebody else.