Chargeback
Also known as: dispute, payment reversal, refund dispute
Full definition
A chargeback is a forced refund initiated by the payer's card issuer (bank) against a merchant's acquiring bank, on the payer's behalf, after a dispute. The issuer investigates the claim (fraudulent card use, non-delivered goods, duplicate charge, service not as described), and if it sides with the payer it pulls the funds out of the merchant's account and returns them to the payer. It applies on Visa and Mastercard transactions in Kenya.
M-PESA has no chargeback equivalent, and this catches merchants by surprise. M-PESA has a reversal flow (Safaricom side): the payer forwards the M-PESA SMS to 456, or dials *456#, or calls Safaricom Customer Care 100/234, within a limited window (typically 7 days for a valid Send Money reversal) and Safaricom moves the funds back if the recipient's balance still has them. It is a soft process, not a legal claim, and it fails often when the recipient has already spent the money.
For merchants: the practical implication is that M-PESA payments are much closer to cash than to card. Once received and cleared, they cannot be pulled back by the payer's bank. This is a feature (finality) and a risk (no consumer protection against merchant non-delivery). Chargebacks proper still apply to cards, and Kenyan e-commerce merchants who accept Visa or Mastercard should build a dispute-response process.
Worked example
A customer buys a laptop online for USD 800, pays by Visa card. It never arrives. She disputes the charge with her bank. The bank raises a chargeback. Two weeks later USD 800 is pulled out of the merchant's account and returned to her card. If she had paid by M-PESA STK Push, she would instead have to rely on Safaricom's *456# reversal flow within 7 days.
Verified 2026-09-01. Definitions on paybillke are sourced from Safaricom PLC Annual Report FY2026, the Central Bank of Kenya, the Communications Authority of Kenya, the Kenya Revenue Authority, and the primary operator documentation for each product. How we verify. Report a change.