September 27, 2022


Chargebacks are essential to consumer protection, and they increase confidence for online payments. Whilst they are vital in ensuring consumers have a safe payments process, they also are frustrating for Merchants. There are ways your Merchants can decrease the risk of chargebacks and protect their business.

What Do Chargebacks Mean for Merchants?

When a consumer files for a chargeback, Merchants can lose revenue. Once a bank has reviewed the transaction and approved the chargeback, a Merchant can face fees up to twice as much as the transaction amount.

Merchants with a high ratio of chargebacks also run the risk of additional fines and the termination of their Merchant account. Card Schemes, and other financial institutions, set thresholds for the acceptable percentage of chargebacks on transactions. The most common value is 1%, meaning if a Merchant’s chargeback rate is higher than this, they can face penalties.

Whilst this may sound daunting, there are steps Merchants can put in place to reduce the likelihood of chargebacks.

How To Prevent Chargebacks.

  • Make Returns Easy – Merchants with a clear and easy-to-navigate return policy have a higher customer retention rate. As well as this, if it is easy for the consumer to return their product for a full refund, they are less likely to create a chargeback with their bank.
  • Send Products on Time – Establish realistic delivery and processing time frames. Similarly, providing consumers with a tracking method will allow them to follow their purchases and have an exact time to expect their products.
  • Prevent Fraud – Implementing a fraud prevention tool such as Kount will help reduce chargebacks by ensuring that only verified transactions are completed. Having a system in place to identify customers who regularly file for chargebacks can help prevent friendly fraud.
  • Avoid Miscommunication – It is important that Merchants ensure that all descriptions of products and services are accurate. This will prevent miscommunications and ensure that consumers are receiving the products they thought they were getting.

To learn how Cardstream can help take your Merchants to the next level, contact us.

Stay up to date with all the latest news from Cardstream by joining our mailing list here