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My impression was that payment processors, not banks, were on the hook for chargebacks, but I may misremember?

• adrianmonk 5y ago
  If there's a chargeback, someone has to cough up the X dollars that the cardholder spent and return it them. That typically isn't the bank. But it also requires Y dollars of overhead to work on the issue until it's resolved. The cardholder calls their bank (the issuing bank) on the phone, and right away the bank has spent money answering the call. After the bank tells the merchant that a chargeback is happening, the merchant can dispute the chargeback (make their case that it was a legit purchase), which the bank has to adjudicate. Credit card processing is a high-volume, low-margin business. The bank's cut is roughly 2-3% of the purchase. For a $10 purchase on OnlyFans, the bank is only making like 20 to 30 cents off that transaction. If a chargeback happens, the required manual work will cost them many times that. So, in order for it to be profitable, banks need chargebacks to be rare. If they're frequent, it's less profitable or even unprofitable.