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 – September 2025

As e-commerce continues to evolve at a rapid pace, a critical trend for September 2025 is the advanced use of AI and machine learning in proactive fraud prevention. Beyond the traditional methods, modern platforms are increasingly integrating sophisticated algorithms that analyze behavioral patterns, transaction histories, and device fingerprints in real-time. This allows merchants to identify and flag suspicious activities before they escalate into costly chargebacks. Investing in robust fraud detection systems that leverage predictive analytics can significantly reduce both friendly fraud and genuine malicious attacks. Merchants should look for solutions that offer customizable rules, integrate seamlessly with their e-commerce platforms, and provide detailed reporting to understand fraud trends specific to their business. Furthermore, implementing multi-factor authentication for high-value orders or new customer accounts can add an extra layer of security without creating excessive friction. Staying informed about the latest cybersecurity threats and adopting a layered security approach is paramount to protecting your revenue and customer trust in today's digital landscape.

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