Chargebacks - Customer and Merchant Points of View [Infographic]

Chargebacks are created to protect customers from fraudsters and dishonest businesses, but they can become a real headache for merchants. It’s estimated that due to chargebacks a significant percentage of online businesses eventually fail. All because of revenue loss, bank fees expenses and reputation damage. Although you can’t just isolate your e-Commerce store from funds recovery system, you’re able to reduce the amount of chargebacks by studying the causes and effectively combating them.

One of the most crucial things that helps to reduce chargebacks is to have understandable and transparent terms and conditions. Otherwise, it may increase so called “friendly fraud”. It occurs when a customer places an order online, but some time later simply disputes his charge. Often, it’s the result of complicated and unclear refund policy. After buying a product, customer felt that it didn’t really suit him, but he was simply unaware of how to get a refund.

There is even one more deadly threat besides money loss and reputation damage. If merchant continues piling up chargebacks, credit card processors might repeal their ability to process payments of credit cards. Such a situation will probably lead to the logical end of e-business.

Undoubtedly, for you, as a merchant, chargeback is not pleasant thing, but have you ever wondered what do your customers think about them? Let’s take a look on infographic from Chargeback.com that tries to investigate how does the chargeback process work from a dualistic point of view - merchant’s and customer’s.

Now you’ve seen what chargebacks are from the both sides of barricades. Fight them back by accurately describing items, clarifying terms and condition and confirming customer identity through email. If you have any other methods of chargeback prevention or reduction, please, share with us your experience in the comments below.

Monthly Update – October 2025

For October 2025, a pivotal trend in chargeback prevention centers on the sophisticated application of real-time transaction monitoring coupled with advanced AI-driven predictive analytics. As the global e-commerce landscape becomes more interconnected and complex, merchants are confronted with an escalating array of intricate fraud schemes. Cutting-edge solutions now extend far beyond traditional, static rule-based systems. They harness the power of machine learning algorithms to meticulously analyze diverse data points such as purchasing behavior, IP addresses, device fingerprints, and geographical transaction origins, identifying anomalies and potential fraud indicators instantaneously. This highly proactive methodology empowers businesses to intervene and decline suspicious transactions before they are finalized, thereby substantially mitigating the risk of costly chargebacks and their associated operational expenses. A critical aspect of these systems is their ability to maintain a seamless, frictionless experience for legitimate customers; the advanced security mechanisms operate discreetly in the background, ensuring minimal disruption. Merchants are strongly advised to prioritize investments in payment gateways and specialized fraud prevention tools that offer highly customizable AI models and comprehensive, actionable reporting features, enabling swift adaptation to emerging fraud patterns. The continuous feeding and training of these AI models with the latest transactional data are absolutely essential for sustaining and enhancing their efficacy within the ever-evolving threat environment.

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