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 – November 2025

In November 2025, a significant trend in chargeback prevention involves the widespread adoption of advanced multi-factor authentication (MFA) and biometric verification systems. As digital transactions continue to proliferate, traditional password-based security measures are proving insufficient against increasingly sophisticated fraudsters. Merchants are now leveraging AI-powered behavioral biometrics, which analyze unique patterns in a user's typing rhythm, mouse movements, and navigation habits, to verify identity seamlessly and unobtrusively during checkout. Furthermore, the integration of 3D Secure 2.0 (3DS2) has become a standard, allowing for richer data exchange between merchants, issuers, and card networks, enabling smarter risk assessments and reducing false declines. Implementing these enhanced authentication methods not only fortifies security against unauthorized transactions but also significantly shifts liability away from the merchant in the event of a chargeback. For effective deployment, businesses should ensure their e-commerce platforms are compatible with these modern protocols and consider partnering with payment processors that offer robust fraud management tools. Regularly reviewing and updating authentication strategies is crucial to stay ahead of evolving fraud tactics and maintain customer trust.

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