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 – December 2025

As we close out 2025, the landscape of chargeback prevention is continually shaped by advancements in AI and evolving regulatory frameworks. A key trend for merchants is the adoption of real-time fraud detection systems that leverage machine learning to analyze transactional data for anomalies instantaneously. These systems integrate with payment gateways to flag suspicious activities before authorization, significantly reducing the window for fraudulent transactions. Furthermore, compliance with updated payment security standards, such as enhancements to 3D Secure protocols (e.g., 3DS2.2 or higher), remains paramount. These protocols enable richer data exchange between merchants, issuers, and card networks, facilitating more intelligent risk assessments and minimizing friction for legitimate customers. Merchants are also increasingly utilizing granular customer behavior analysis, including device fingerprinting and geo-location, to build comprehensive risk profiles. Investing in robust fraud analytics and maintaining clear, accessible refund policies are crucial strategies to mitigate 'friendly fraud' and strengthen your defenses against malicious chargebacks in the coming year.

For more details, explore our FAQ section or schedule a call with a migration expert.