Although chargebacks are relatively easy for a consumer to initiate, they cause a lot of work for the merchant and the involved banks and credit card companies. They typically include this sequence of events:

A cardholder finds an unauthorized debit item on their credit card statement and contacts the bank, for example by filing a complaint using a form on its website. The bank (the card issuer) checks the item and requests the acquirer (the merchant’s bank) to reverse the funds that had been credited to the merchant’s account. The merchant’s bank also checks the payment and informs the merchant. The merchant either accepts the reversal of funds or disputes the chargeback while submitting appropriate evidence. This information is relayed via the acquirer back to the issuer. Depending on the decision reached in the dispute process, the sum may be charged to the cardholder once again or else credited to their account.

Every chargeback also affects the merchant, who―as the payment recipient―also has to pay the associated fees. In addition to the costs, however, there are also other disadvantages. Many banks have begun imposing fines or even lockouts on merchants with excessive chargeback rates. So merchants should always keep track of how many payments are reversed by customers claiming that they had not authorized them.

The situation is aggravated by the fact that some chargebacks are fraudulently initiated. This is one of the most common forms of fraud, in fact, alongside identity theft. It is therefore important to practice effective fraud prevention by detecting and blocking malevolent transactions before they culminate in a purchase.

• Order status always up to date
• Easy to correlate payments with shops
• Thorough documentation of orders and proof of deliveries