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 – January 2026

Entering 2026, the e-commerce landscape demands sophisticated strategies for chargeback prevention. A primary focus for merchants should be the integration of advanced AI-driven fraud prevention tools, moving beyond basic detection to predictive analytics that can identify patterns of fraudulent behavior even before a transaction is fully processed. The emphasis is on layered security, combining biometric authentication for high-value transactions with passive behavioral analysis to minimize friction for legitimate customers. Furthermore, understanding the nuances of evolving regulatory landscapes, such as strengthened consumer protection laws and new data privacy acts globally, is critical. Merchants must ensure their refund and return policies are not just clear, but also easily accessible and actionable, which significantly reduces instances of "friendly fraud" stemming from customer confusion or dissatisfaction. Investing in robust post-purchase communication and tracking tools can also pre-empt disputes related to shipping delays or product discrepancies. Proactive engagement with customers through clear communication channels and streamlined dispute resolution processes will be key to safeguarding revenue and maintaining merchant reputation in the coming year.

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