A chargeback is a refund forced by the cardholder's bank. One dispute is an annoyance, but as the ratio grows the acquirer adds a reserve, raises the rate and may eventually close your merchant account. The good news: most chargebacks can be prevented before the customer ever calls the bank.
In short: keep the chargeback ratio well below 1% of transactions. The main tools are a recognisable descriptor, 3-D Secure, fast support and willingness to refund before the customer opens a dispute.
Where chargebacks come from
| Type | Example | How to prevent |
|---|---|---|
| Fraud | Payment with a stolen card | 3-D Secure, anti-fraud rules |
| "Friendly" fraud | The customer did not recognise the charge | Clear descriptor, confirmation emails |
| Service dispute | Item not received or not as described | Accurate descriptions, tracking, support |
| Subscriptions | The customer forgot about renewal | Reminders before charging, easy cancellation |
Which thresholds are monitored
Card schemes and acquirers run merchant monitoring programmes with thresholds for chargeback and fraud ratios. Exact values differ by scheme and region and change over time, but in practice the danger zone starts at roughly 0.9–1% of monthly transactions. Exceeding it leads to fines, remediation plans and, at worst, account closure.
10 ways to reduce chargebacks
- Use a recognisable descriptor: your brand name and a contact, not a legal entity the customer does not know.
- Enable 3-D Secure — for fraud disputes liability often shifts to the issuing bank.
- Send an order confirmation and receipt right after payment.
- Describe products and services honestly, with photos and timelines.
- Provide tracking numbers and proof of delivery.
- Make support fast and visible: chat, email, phone.
- Refund proactively when a dispute is inevitable: a refund costs less than a chargeback.
- For subscriptions: a reminder before charging and one-click cancellation.
- Use early dispute alerts if your provider offers them.
- Analyse the reason for every dispute and fix the source.
Round-the-clock fast support can be handled by an AI assistant connected to your CRM: it answers customers before they go to the bank. See our AI platforms service.
Frequently asked questions
Can I fight a chargeback?
Yes, through representment: you submit evidence — proof of delivery, correspondence, logs. Your chances are better if evidence is collected automatically.
Do refunds count as chargebacks?
No. A voluntary refund is a regular transaction, so refunding before a dispute is almost always cheaper.
What if my ratio is already above the threshold?
Find the main source of disputes immediately, strengthen anti-fraud and support and agree a remediation plan with the acquirer. In parallel, prepare a backup route through another payment gateway.
Chargebacks growing or the acquirer added a reserve? Send a request on the merchant accounts page and we will analyse dispute causes, tune your profile and find an acquirer that fits your model.