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Accepting Credit Card Payments: What You Don’t Know About Chargebacks That Can Hurt You


by Andrew Parry, founder of Vubo.co.uk

Credit card

Many business owners find the mere mention of chargebacks seems to get stuck in their throat, but are they right to be so fearful of this dreaded payment issue?

Any business that uses online payment systems and takes card payments, will be familiar with the fact that a chargeback is a result of a customer disputing a sale that has been charged to their card and requesting a refund of the money.

Many reasons.

There are actually well over thirty recognised reasons why a chargeback can be requested and initiated by the customer.

These reasons vary from product not received, damaged or broken items and service not as described, through to an error in the amount charged or disputed authority to take payment.

A good number of merchants are not completely familiar with the chargeback process and this lack of understanding can sometimes lead to unfounded fears or a degree of uncertainty.

Initiating a chargeback.

There are a number of distinct phases to the chargeback process.

The first part involves the cardholder contacting their card provider and query the item on their card statement. The card issuing bank will respond to this request by sending out a dispute resolution form and processes the chargeback.

Once the card issuer has done some initial research into the dispute to evaluate if they think that the shopper’s dispute might be valid, they will make a provisional payment to the customer while further enquiries are carried out.

The acquiring bank will then send a Notification of Chargeback to you and a Request for Information as well. If you do not respond to this request, the chargeback can proceed unchallenged and the money you original received via the card payment will be gone.

It is important that you respond promptly to the card issuer. If they decide that the information you have provided satisfies their rules and requirements, you will be paid for the transaction a short while after the investigation has concluded.

Good customer service.

One of the ways in which you can help to reduce or avoid the number of chargebacks is to operate a good customer service policy.

This is obviously good business practice anyway and by having a proactive way of maintaining dialogue with your customers, via phone or email, it gives customers the chance to raise a question or dispute with you first, before they go to the card issuer for a chargeback.


No amount of good customer service or high standards or goods or services can really prevent chargebacks when fraud is involved.

Visa have reported that around 70% of all their chargebacks are related to fraudulent transactions, so your business is definitely vulnerable to receiving a number of chargebacks every year, regardless of what you to do to keep your customers satisfied.

Some customers will deliberately request a chargeback even though they either received the items that they claim are missing or they are actually happy with the service they got but are simply saying otherwise to get their money returned.

Try to make use of good fraud prevention measures available and always aim to provide a high level of customer service, which will encourage customers to contact you first and may even deter some less scrupulous customers, to look elsewhere for someone to inflict their chargeback misery upon.


Andrew ParryAndrew Parry is an entrepreneur and design junkie with 8 years experience of the high and lows of digital marketing, ecommerce and lead generation. He is founder of Vubo.co.uk, which provides customer acquisition and ecommerce services for small UK businesses.




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