What are chargebacks and how to fight them

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So, the consumer has the right within a certain period to apply to his bank and protest the transaction. Then the process of interaction between the payer’s bank and the beneficiary is started. As a result, a decision is made to return the funds for the disputed transaction - this is a chargeback.

Remember, if a merchant has too many chargebacks - it will be deadly for your business.

The procedure for a chargeback is described in the VISA rules as follows:

  • A client - an individual applies to the issuing bank with a statement challenging the operation.
  • An issuer sends an application to the payment system.
  • A payment system through the acquiring bank forwards this application to the trade and service company.
  • A company reviews the application and sends the result to the address of the acquiring bank.

A decision on the application is made not by the court or a state body, but by the bank. At the same time, there is no right to appeal against the issuing bank of the decision made by the trade and service company.

Chargeback can be initiated by the payer in the following cases:

  • A merchant did not refund.
  • There was a double charge on the card
  • The transaction was made for an amount different from the purchase price.
  • Invalid date and time of operation.
  • Signature on the card and in the invoice is different.
  • Money was withdrawn for the purchase, which the cardholder did not commit.
  • Money was withdrawn from the account, but the buyer did not receive the product or service.
  • A customer is not satisfied with the product or service.
  • The client received the product or service but made the payment in another way (in cash, from another card, etc.).
  • A merchant refused to accept the goods back.

Features of this procedure:

  1. The right of protest is limited to 45 days.
  2. The procedure is not fixed by law, but only by the rules of payment systems. In fact, it exists as a superstructure above regulatory acts. Each bank prescribes the use of chargeback in the contract while embedding it in the relationship.

How to minimize risks

If it is impossible to deprive the consumer of the right to apply for chargeback, then there is an opportunity to minimize the risk of satisfaction of claims. For this you need:

  1. In the contract with the consumer to provide the procedure for the provision of services (transfer of goods), as well as the moment in which the obligations to the consumer are fulfilled. The fulfillment of these points can be referred to in the case of claims.
  2. To have documents confirming the fulfillment of obligations. Often, the bank makes a decision in favor of the consumer simply because the seller has not retained the act of acceptance and transfer of the goods and cannot provide anything in support of his good faith.
  3. If the company is an agent, it is necessary to have documents confirming the transfer of funds to the appropriate addressee.
  4. Upon receipt of a claim, it is necessary to make a written response and attach all available documentary evidence.
  5. If decisions are not in your favor, try to appeal this - there are examples of positive court decisions.
  6. Probably the best option - is to choose a reliable payment provider which will monitor all transactions and prevent frauds

Hope it was helpful
You can also see how to fight chargebacks here: https://payspacelv.com/four-tips-for-battling-business-chargebacks/

Payment processing solutions | Account and company registration | credit&debit card processing
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Community Manager
Community Manager
2117 128 271

Great post @royce2, thanks for sharing. Learning about Chargebacks and how to approach them is essential for any online store owner. 


Should anyone want to learn more about the Chargeback process in more detail, you can see the Shopify information document here as well as a blog post from the content team at Shopify with more information here


The Shopify app store also has some apps which can help store owners detect potential fraudulent customers and orders which might also be useful. Some of the most popular fraud apps can be found below:


All the best, Nick

Nick | Social Care @ Shopify
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Shopify Partner
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Great tips Nick!

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