Websites · Glossary
What is a chargeback?
A chargeback is the reversal of a card payment by the cardholder's bank after the cardholder disputes it, for example as fraud, an item not received or not as described. The money and usually a dispute fee are taken back from the merchant, who can submit evidence to contest it. The card network's rules decide the outcome.
A refund is something a shop chooses to give. A chargeback is something a bank takes, with a fee on top, and too many of them can put a merchant account at risk.
Nuwan Madhusanka · Co-founder
4 min read · Published
| Event | Started by | Money movement | Merchant's role |
|---|---|---|---|
| Refund | The merchant | Merchant returns funds | Decides and processes it |
| Inquiry or retrieval | The issuing bank | None yet | Answer with information to avoid escalation |
| Chargeback | The cardholder through their bank | Funds and a fee are debited | Accept, or submit evidence by the deadline |
| Early fraud warning | The card network | None | Optionally refund to head off a dispute |
How the dispute process runs
The cardholder contacts their bank, which files a dispute through the card network under a reason code. The payment provider notifies the merchant, debits the disputed amount and a dispute fee, and gives a deadline to respond. The merchant either accepts or submits evidence, which the issuing bank reviews. Stripe's documentation notes that card networks typically allow cardholders to dispute within 120 days of the payment, and longer for future events or services, and that once evidence is submitted the issuer usually takes 60 to 75 days to decide. Some networks start with an inquiry before a formal chargeback.
The evidence that wins
Evidence should answer the reason code directly. For item not received, send proof of delivery with tracking. For not as described, send the product description the customer saw and any messages. For fraud, show the customer's order history, matching billing and delivery details, and any sign in records. For cancelled subscriptions, show the cancellation policy and when the customer agreed to it. Keep it brief and organised; an issuing bank reviewer reads many cases. Visa publishes dispute resolution guidance for businesses that explains the main dispute categories.
How to prevent chargebacks
Many chargebacks start with confusion rather than fraud. Use a recognisable business name on card statements, send order and shipping confirmations, make the refund policy easy to find, answer customer emails quickly, and refund promptly when a refund is fair. Responding to early fraud warnings with a refund can avoid a dispute and its fee. Stripe's prevention guide lists these and other steps, such as collecting complete billing details and using fraud screening.
Common mistakes
Ignoring dispute notices is the costliest mistake, because a missed deadline means an automatic loss. Others include refunding a payment after a chargeback has already been filed, which can cost the money twice; sending a wall of irrelevant documents; and arguing with the customer instead of resolving the issue. A rising dispute rate, even on small amounts, can lead a provider to hold funds or close an account.
Where it shows up in OneCraft
OneCraft has no ready made store. When a site takes payments, each order is paid through Stripe Checkout as a direct charge on the owner's connected Stripe account, so the payment, and any dispute against it, sits in that Stripe account. Refunds are made in the owner's Stripe dashboard, and a full refund marks the order refunded in the site's database. Orders built from the agent's guides keep their status and receipt, which helps when gathering evidence.
Questions people ask
Can a customer do a chargeback after a refund?
They can try, especially if the refund has not appeared on their statement yet. Keep the refund confirmation and send it as evidence if a dispute arrives. Tell customers how long refunds take to appear, which often prevents a duplicate dispute in the first place.
How much does a chargeback cost the merchant?
The disputed amount is debited straight away, and most providers add a dispute fee that varies by provider and country. Some return the fee if the merchant wins, and many do not. On low value orders the fee can exceed the sale, so preventing disputes matters more than winning them.
What is friendly fraud?
Friendly fraud is when a genuine cardholder disputes a payment they actually made, sometimes because they forgot the purchase, did not recognise the business name, or wanted to avoid a return process. Clear statement names, confirmation emails and easy refunds reduce it, and delivery and order records help contest it.
Should I accept a chargeback instead of fighting it?
Accept when the customer is right or you lack evidence, because contesting costs time and rarely changes the outcome. Fight when you have clear proof, such as signed delivery for an item not received claim. Either way, learn from the reason code so the same problem does not repeat.
Can chargebacks happen on bank transfers?
Not in the card sense. Chargebacks belong to card schemes. Bank transfers have their own recall and fraud processes, which are different and generally harder for the payer to reverse. That is one reason some businesses prefer bank transfer for large invoices, at the cost of convenience for the customer.
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Written and checked by the OneCraft team. Last checked .