Chargebacks are part of taking cards, but you can prevent many of them and win more of the ones you get.
How a chargeback works
- The customer contacts their card issuer and disputes a charge.
- The issuer takes the money back from your account, and your processor notifies you.
- You have a limited time to respond with evidence. The deadline is set by the card network and your processor, and it can be short, so act quickly.
- The issuer reviews both sides and decides who keeps the money.
Why they cost more than the sale
If you lose, you lose the sale, any product you shipped or service you provided, and the chargeback fee. Even if you win, many processors keep the fee. And businesses with too many disputes can end up in card network monitoring programs, face higher fees, or have their accounts reviewed or closed.
Common reasons for chargebacks
- Fraud: someone used a stolen card or card number.
- "I don't recognize this charge": often because the name on the customer's statement does not match your business name.
- Product or service problems: the customer says it never arrived, was not as described, or was not done.
- Cancelled subscriptions or recurring charges the customer thinks should have stopped.
- Processing errors, like a duplicate charge.
How to prevent them
- Make sure the business name on customer statements is one they will recognize. Your processor can help set this.
- Dip or tap cards when the customer is present instead of typing the number in. Chip and contactless payments give you much better protection against fraud disputes.
- Post a clear refund and cancellation policy, and show it at checkout and on receipts.
- Make it easy to reach you. A customer who can get a refund from you usually will not call their bank.
- Keep records: signed receipts, invoices, delivery confirmations, photos of finished work, and messages with the customer.
- For deposits and large jobs, get a signed agreement that spells out what the customer is paying for.
How to fight one
- Respond before the deadline. Missing it usually means you lose automatically.
- Read the reason code. It tells you what the customer claimed, and your evidence should answer that exact claim.
- Send clear, organized proof: receipts, signatures, delivery tracking, contracts, and any messages showing the customer received what they paid for.
- Keep it short and factual. Explain what happened in a few sentences, in order.
- If the customer was right, accept it and fix whatever caused it so it does not happen again.
RelatedHow to fight a chargeback, step by stepToo many chargebacks: what happens
Need help?
If you are getting chargebacks and are not sure why, I can help you figure out what is causing them and what to change. For my clients, I am the first call when a dispute comes in, and the Green PayTech support team is behind me for the deeper work.
Rules, deadlines, and reason codes differ by card network and change over time. Your processor's notice for each dispute lists the exact deadline and what is needed.