Beating Chargebacks: A Shopify Merchant’s Playbook for Victory

Running a Shopify store is exciting work, but it comes with its fair share of challenges—one of which is chargebacks. These reversals can cost you time, money, and even your business's reputation.

But what exactly are chargebacks, and how can you protect your store from them?

In this article, we’ll explain everything you need to know, including what they are, why they happen, and how to dispute them. We’ll also dive into friendly fraud and share tips to prevent it.

What is a chargeback?

A chargeback happens when a customer asks their credit card issuer to reverse a transaction, returning the funds used in a purchase. Unlike a typical return, chargebacks involve the card issuer holding funds from the merchant until a decision is made. If the issuer rules against the merchant, the funds go back to the customer, often with an added fee for the merchant.

Chargebacks can stem from various issues, like fraud, product disputes, or billing errors. Understanding them is the first step to keeping your Shopify store safe.

Why do chargebacks happen?

Chargebacks occur for a handful of reasons, and knowing these can help you spot trouble before it starts. Here are the main culprits:

• Fraud: When someone uses a credit card without the owner’s permission, it’s the top reason for chargebacks.
• Quality issues: Customers may dispute a charge if they receive a faulty product or nothing at all.
• Clerical errors: Double charges or unprocessed refunds can trigger chargebacks.
• Technical glitches: Bank or card issues, like payment processing hiccups, can also lead to reversals.

Each chargeback comes with a reason code from the card issuer, giving you a clue about what went wrong and how to fight it.

Friendly fraud: a growing problem

Friendly fraud is a sneaky issue where a customer requests a chargeback even after receiving their order. Maybe they’re unhappy with the product, confused about the charge, or just trying to score a freebie. It’s a big deal—about 61% of all chargebacks fall into this category.

Chargeback fraud is expected to cost merchants $28.1 billion by 2026.

This alarming statistic shows why friendly fraud matters. It’s not just lost revenue; merchants can lose the product and face extra fees, making it a double hit.

How to dispute a chargeback

Did you get a chargeback notice? Don’t panic—act fast. Here’s how to tackle it:

1. Gather your evidence: Pull transaction details like order records, shipping proof, and customer emails.
2. Submit a response: If the chargeback seems off, send a dispute to the card issuer. Follow their rules, meet deadlines, and tie your evidence to the reason code.
3. Wait for the verdict: The issuer reviews everything and decides, which can take up to 75 days.

Oh, and here’s a key tip: aim to keep your chargeback rate below 1%. Going over could lead to higher fees or even account restrictions from your payment processor, such as Stripe or PayPal.

How to protect your Shopify store from chargebacks

Prevention beats dispute every time. Try these steps to cut your chargeback risk:

• Stick to automated payments: Shopify’s checkout and POS systems automatically process card payments securely, reducing errors. Avoid manually typing card details for phone orders or when a card’s chip fails at checkout to lower chargeback risks.
• Use fraud protection tools: Software can flag shady orders before they become problems.
• Be reachable: List your contact info clearly on invoices and your site so customers call you first, not their bank.
• Set clear policies: A straightforward return policy can nudge customers to work with you instead of filing a chargeback.

These habits can save you headaches and keep your ecommerce store humming.

Sufio: your partner in beating chargebacks

Chargebacks can pose a significant challenge, but Sufio equips you with the tools to succeed. Trusted by over 6,800 merchants across 100+ countries, Sufio automates Shopify invoicing to help you manage chargebacks and maintain compliance. Here’s how:

• Accurate invoices and credit notes: Sufio generates valid documents for every scenario—refunds, returns, or order edits—giving you a big part of the proof you need to dispute chargebacks.
• Global compliance: With support for 40+ languages and validation by certified accountants, Sufio meets local accounting and tax rules in places like the EU, UK, and US.
• E-invoicing ready: Stay ahead of laws in markets like Germany and France with strong e-invoicing support.
• Powerful workflows: Set custom rules for invoice timing, send copies to your team, or use unique numbering for different customers.

Plus, as a Shopify-endorsed B2B invoicing solution, Sufio streamlines your process so you can focus on growth, not paperwork.

Don’t let chargebacks slow you down. With smart strategies and Sufio’s powerful feature set, you can protect your business and keep customers happy. Ready to take charge? Install Sufio today and start creating accurate, compliant documents for your store.