How does Shopify Payments handle unwarranted chargebacks?

RoyalRoaches
Visitor
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Hello, considering moving my current e-commerce site to shopify.  Currently utilizing a payment service associated with the host of my store, both online and POS at trade shows we vend. Current processor notes I am solely responsible for chargebacks, and they have no obligation to me to investigate chargebacks. It would appear my current processor claims that no matter what my TOS is, or the TOS of 3rd party where I might offer my products, their TOS supersedes all others. Whether a court of law would agree, given that they control my funds, in essence their TOS does indeed supersede all others....at least until a court of law decides differently.

 

Having read the Shopify Payments processing TOS, and reread it several times, it appears the Shopify TOS is very similar. They offer no obligation to investigate chargebacks, and although they mention helping me to work with the actual bank Shopify uses to process payments, Shopify emphasizes they are just a "facilitator". (my term not theirs) There's mentioning of a reserve account and all sorts of abilities to get your money or keep you from getting your money.

 

Does anyone have any experience with unwarranted chargebacks while using Shopify payments, and if so did they have their own TOS which ended up not being the paper it was written on 'cause Shopify Payments still put a hold on their money and/or removed it from your account, and/or kept future funds from being paid out to cover the chargeback charges ? Did they investigate and of so what was the outcome ?

 

thx in advance

Reply 1 (1)

Shay
Shopify Staff
2968 460 608

Hi @RoyalRoaches 

 

Welcome to the Shopify Community Forums. You have some great, and very valid questions, on the process of how chargebacks are handled and where the responsibility of a chargeback lies. 

 

To start, this is how a chargeback would need to be handled depending on the method of payment by the customer. If you haven't yet, I recommend reviewing our chargeback information in our Help Center to understand the workflow if a chargeback is received: Chargebacks and inquiries · Shopify Help Center.

 

What happens if you receive a chargeback and the customer paid using Shopify Payments:

  • When you get a chargeback or inquiry on an order made with Shopify Payments, Shopify collects evidence and sends it to the credit card company on the due date. Before Shopify sends the response, you can add additional evidence in the Shopify admin. After the evidence is submitted, the chargeback or inquiry is resolved within 120 days.
  • Chargebacks are decided by the cardholder's bank. Shopify is not able to influence or revert this decision. Shopify can assist you by providing information to dispute the chargeback.

 

What happens if you receive a chargeback and the customer paid using Shop Pay:

  • If your business and the order is eligible you may be able to use Shopify Protect for free. Shopify Protect can be applied to orders paid through Shop Pay (Shopify Payments accelerated checkout option). Shopify Protect can only be applied to cover merchants from Fraudulent Chargebacks, it does not protect from other types of chargebacks like lost, stolen, or damaged goods. 
  • Orders that are not eligible for Shopify Protect, but were paid for through Shop Pay, would then follow the same process as Shopify Payments. 

 

What happens if you receive a chargeback through a third party payment gateway:

  • You would need to follow the chargeback process in place for that payment gateway specifically. Shopify the platform would not be able to provide any additional support in that situation and would have no liability in the outcome.
  • Some merchants do use third party protection services and apps to help mitigate the impact of a chargeback. Each app or service used would be independent of the Shopify platform and you would need to work with them directly for a resolution. 

 

The second part of your question was about chargeback liability, ownership, and mitigation of risk to the payment gateway/platform. 

 

As is standard practice across ecommerce platforms and online payment gateways, a chargeback is generally considered the sole responsibility of the merchant and customer to resolve. It is the responsibility of the platform hosting the business and the gateway used to process these payments to review and assess the level of risk a business has and their history of chargeback occurrences.

 

Businesses that may be a good fit otherwise but have a high risk of chargebacks may have access to the Shopify Payment gateway revoked, have a payout hold aka reserve (in entirety or a percentage of processed payments) put in place or you could be removed from the platform entirely. These actions can be taken immediately and without prior notice. 

 

Note: Shopify provides Shopify Payments as an easy to use payment gateway with a low barrier to access. We do not have control over your access to third party payment gateways or payouts processed through those gateways. 

 

I am happy to dive deeper into any specific questions you have. Feel free to reply back if you want to know more about any of the topics I touched upon here or any other questions about the Shopify platform you might have. 

Shay | Social Care @ Shopify 
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