How to Deal with Chargebacks on Shopify

What Is a Shopify Chargeback?

A chargeback happens when a customer contacts their bank or card issuer to dispute a transaction. The bank reverses the payment, pulling the funds directly from the merchant's account. For Shopify merchants using Shopify Payments, this means the disputed amount is deducted from your next available payout.

Chargebacks were originally designed to protect consumers from fraud, but they've become a much broader issue. Customers file chargebacks for everything from genuinely stolen cards to simple buyer's remorse. Industry data suggests that around 80% of chargebacks are classified as "friendly fraud," meaning the cardholder did make the purchase but disputes it anyway.

The financial impact goes beyond the lost sale. You lose the product, the transaction amount, the chargeback fee, and the time spent fighting the dispute. Chargeback costs are estimated at 0.47% of merchant revenue on average, which adds up quickly for high-volume stores. Understanding how chargebacks work on Shopify is the first step to managing them effectively.

How the Chargeback Process Works on Shopify

The Shopify chargeback process follows a predictable sequence, though timelines vary depending on the card network and issuing bank.

Step 1: The customer disputes the charge. The cardholder contacts their bank and claims the charge is invalid. The bank initiates the chargeback, immediately withdrawing the disputed amount plus a chargeback fee from your Shopify Payments account.

Step 2: Shopify notifies you. You'll see the chargeback in your Shopify admin under Orders. Shopify gives you a deadline to respond, typically between 7 and 21 days depending on the card network. This deadline is firm and cannot be extended.

Step 3: You gather and submit evidence. Shopify automatically collects some evidence from your account (order details, fulfillment data, customer information) and prepares it for submission. You can add additional evidence before the deadline to strengthen your case.

Step 4: The card issuer reviews. Once evidence is submitted, the card issuer or network reviews both sides. This review process can take up to 120 days. During this time, you have no ability to influence the outcome.

Step 5: A decision is made. If you win, the disputed amount is returned to your account and the chargeback fee may be refunded (this varies by country). If you lose, the customer keeps the funds and the decision is final. There is no appeal process for most chargeback decisions on Shopify.

One important thing to understand: Shopify is not involved in the chargeback decision. They facilitate the evidence submission, but the ruling comes entirely from the card issuer. Shopify cannot overturn a chargeback outcome.

Shopify Chargeback Reason Codes Explained

Every chargeback comes with a reason code that indicates why the customer filed the dispute. Understanding these codes is essential because the evidence you need to submit depends on the reason. Here are the main categories you'll encounter on Shopify.

Fraudulent. The cardholder claims they didn't authorize the transaction. This is the most common reason code and covers both genuine card theft and friendly fraud. It accounts for the majority of ecommerce chargebacks, with research suggesting around 71% of digital commerce losses come from friendly fraud alone.

Unrecognized. The customer doesn't recognize the charge on their statement. This often comes down to billing descriptors. If your Shopify store name doesn't match what appears on the customer's bank statement, they may not connect the charge to their purchase.

Duplicate. The customer believes they were charged twice for the same order. This can happen through genuine processing errors or simply because the customer misread their statement.

Subscription canceled. The customer claims they canceled a recurring charge but were still billed. This is common with subscription boxes and membership-based Shopify stores.

Product not received. The customer says the order never arrived. This represents over 26% of all chargebacks and includes both genuine delivery failures and customers who received their order but claim otherwise.

Product unacceptable. The item arrived damaged, defective, or significantly different from its description. Wrong items shipped to customers account for approximately 15% of all chargebacks.

Credit not processed. The customer returned a product or canceled an order but hasn't received the expected refund.

General. A catch-all category for disputes that don't fit neatly into other codes. These require careful review of the customer's specific complaint to craft an appropriate response.

Chargeback Fees on Shopify

Beyond losing the transaction amount, Shopify charges a non-refundable chargeback fee every time a dispute is filed against you. The fee varies by country and is charged regardless of whether you win or lose the dispute (though some regions refund the fee if you win).

Here are the current Shopify Payments chargeback fees by region:

• United States: $15 USD
• Canada: $15 CAD
• United Kingdom: £10 GBP
• European Union: €15 EUR (plus VAT where applicable)
• Australia: $25 AUD
• New Zealand: $20 NZD

These fees might seem small individually, but they compound quickly. A store processing 1,000 orders per month with a 1% chargeback rate would face $150 in fees alone, before accounting for the lost revenue and product costs. For Shopify Plus merchants operating at higher volumes, chargeback management becomes a significant operational concern. Our guide to Shopify Payments covers the broader payment processing landscape if you want more context on how payments work on the platform.

How to Respond to a Shopify Chargeback

When you receive a chargeback notification, you have two choices: accept it or fight it. If the dispute is legitimate (you genuinely made an error, the product was defective, or the refund was delayed), accepting the chargeback and improving your processes is often the better path.

If you believe the chargeback is unjustified, here's how to respond effectively through your Shopify admin.

Review the chargeback details immediately. Go to Orders in your Shopify admin and click on the disputed transaction. The chargeback banner will show you the reason code, the deadline for response, and any evidence Shopify has already collected automatically.

Contact the customer directly. Before building your formal response, reach out to the customer. Many chargebacks result from confusion, and a simple conversation can resolve the issue. If the customer agrees the chargeback was a mistake, they can contact their bank to withdraw the dispute.

Build your evidence package. If direct resolution fails, prepare your compelling evidence. Shopify accepts PDF, JPEG, and PNG files only. PDFs must be PDF/A compliant, under 50 pages, and no larger than 2 MB per file. Combined evidence files cannot exceed 4 MB total. Do not include audio, video, or links to external materials.

Tailor your response to the reason code. Generic responses lose chargebacks. Match your evidence directly to the specific claim the customer is making. We cover exactly what evidence you need for each reason code in the next section.

Submit before the deadline. Aim to submit your response at least three days before the due date. Shopify sends all collected evidence to the card issuer on the deadline date. Your progress saves automatically, so you can return and add evidence at any time before submission.

One recent addition worth noting: for "product not received" disputes, Shopify now includes AI-generated insights alongside your submitted evidence. These insights are extracted from your evidence and account data to help support your case. You can opt out of this feature from the evidence submission form if you prefer.

Evidence That Wins Chargeback Disputes

The evidence you submit directly determines whether you win or lose. Generic documentation rarely works. Here's what to include based on the most common reason codes.

For fraudulent or unrecognized claims:

• Order fulfillment date and time
• Customer billing information matching the order
• IP address and country used to place the order
• Shipping and tracking information showing delivery
• Proof of connection between the order recipient and the cardholder (if a family member used the card)
• Previous non-disputed orders from the same customer, IP address, or email
• AVS (Address Verification System) match results
• 3D Secure authentication records if applicable

For product not received claims:

• Carrier tracking number and delivery confirmation
• Signature confirmation if available
• GPS delivery coordinates from the carrier
• Photo proof of delivery (some carriers provide this)
• Communication with the customer about delivery status

For product unacceptable claims:

• Product descriptions and photographs from your listing
• Proof the item was as described
• Communication with the customer about the issue
• Your return and refund policy
• Evidence that a replacement or refund was offered

For subscription canceled claims:

• Cancellation policy documentation
• Records showing when the customer agreed to the subscription terms
• Email notifications sent about upcoming charges
• Activity logs showing the customer used the service after the disputed charge

For credit not processed claims:

• Your refund and return policy as agreed to at checkout
• Proof the refund was issued (if it was) with transaction ID
• Evidence the customer didn't follow return procedures
• Communication records about the refund timeline

We've seen merchants lose winnable chargebacks simply because their evidence was poorly organized. Keep your documentation clear, relevant, and directly tied to the specific claim. One well-structured PDF beats a scattershot collection of loosely related files.

Preventing Chargebacks on Shopify

Prevention is always more cost-effective than fighting disputes after the fact. Here are the strategies we recommend to Shopify Plus merchants based on what we've seen work across client stores.

Make your billing descriptor recognizable. One of the simplest fixes. If your Shopify store is called "Bloom & Botanics" but your billing descriptor shows "B&B LLC," customers won't recognize the charge. Update your billing descriptor in Shopify Payments settings to match your brand name as closely as possible.

Write accurate product descriptions and use genuine photography. Product-related chargebacks often stem from mismatched expectations. If your product photos are heavily edited or your descriptions oversell the product, you're inviting disputes. Honest, detailed product information reduces "product unacceptable" chargebacks significantly. For more on this, see our guide to optimizing product descriptions.

Ship with tracking and require signatures for high-value orders. Tracked delivery with signature confirmation is your strongest defense against "product not received" claims. For orders above a certain threshold (we typically recommend $50 or more), require a signature at delivery.

Communicate proactively throughout the order journey. Send order confirmation emails, dispatch notifications with tracking numbers, and delivery confirmations. The more touchpoints you create, the harder it is for a customer to claim they didn't know about the charge or didn't receive the product.

Make your refund and return policy visible and clear. Display your policy prominently at checkout. Customers who know they can easily return a product are less likely to file a chargeback as a shortcut. A generous, well-communicated return policy actually reduces chargebacks rather than increasing returns.

Respond to customer service inquiries quickly. Many chargebacks start because a customer couldn't reach you. If someone emails about a problem and doesn't hear back within 24 hours, the chargeback process becomes their next step. Fast customer service is chargeback prevention.

Use fraud analysis tools before fulfillment. Review orders flagged by Shopify's built-in fraud analysis before shipping. Shopify provides fraud indicators including AVS checks, card verification codes, IP address evaluation, and multi-card detection alerts. Merchants on Advanced Shopify and Shopify Plus also get machine learning-powered fraud recommendations.

Cancel suspicious orders proactively. If an order triggers multiple fraud signals (mismatched billing and shipping addresses, unusual IP location, multiple failed payment attempts), it may be safer to cancel and refund than to ship and risk a chargeback. The cost of a canceled order is always less than the cost of a chargeback.

Shopify Protect and Built-In Fraud Tools

Shopify offers several native tools for chargeback management, though their availability depends on your plan and region.

Shopify Fraud Analysis is available on all plans and provides basic fraud indicators for every order. It checks the billing address against the card's registered address (AVS), verifies the card security code, evaluates the customer's IP address, and flags orders placed with multiple cards. On Advanced Shopify and Shopify Plus plans, you also get machine learning-based fraud recommendations that assign risk levels to orders.

Shopify Protect (also known as Fraud Protect) is Shopify's chargeback protection program. When an eligible order is covered by Shopify Protect and a chargeback is filed, Shopify reimburses both the disputed amount and the chargeback fee. It combines chargeback insurance with fraud scoring to identify which orders qualify for protection.

There are eligibility requirements to be aware of. Shopify Protect currently covers orders that are physical goods shipped via approved carriers within defined timeframes, processed through Shop Pay, and from US-based merchants. It does not cover digital goods, international orders, custom orders with fulfillment windows exceeding seven days, in-store pickup orders, or non-fraud disputes.

Order validation tools like Order Insight and Consumer Clarity work alongside Shopify to intercept disputes before they become formal chargebacks. Prevention alerts can flag potential disputes early, giving you a window to resolve issues directly with the customer. Rapid Dispute Resolution (RDR) protocols can automatically resolve certain low-value disputes.

These built-in tools are a solid foundation, but they don't cover every scenario. For stores with high order volumes or elevated chargeback rates, third-party solutions can fill the gaps.

Visa's VAMP Monitoring Program

From April 2025, Visa introduced the Visa Acquirer Monitoring Program (VAMP), replacing the previous Visa Fraud Monitoring Program and Visa Dispute Monitoring Program. This is relevant to every Shopify merchant because exceeding VAMP thresholds can result in restrictions on your Shopify Payments account.

VAMP identifies merchants with elevated fraud and dispute ratios. If your chargeback ratio (chargebacks divided by total transactions) exceeds certain thresholds, or your enumeration ratio (brute-force card testing attempts) crosses defined limits, you get placed on the monitoring program.

Extended enrollment in VAMP carries real consequences: fines from Visa, restrictions on your payment processing, and potentially having your Shopify Payments account suspended. The specific thresholds are not publicly disclosed by Visa at the merchant level, but the general guidance is to keep your chargeback ratio well below 1% of total transactions.

This makes chargeback prevention even more critical in 2026. It's no longer just about the individual cost of each dispute. A sustained high chargeback rate now threatens your ability to accept card payments at all. For Shopify Plus merchants, we recommend monitoring your chargeback ratio monthly and taking immediate action if it approaches 0.65% to give yourself a buffer before reaching problematic levels.

Chargeback Automation and Third-Party Tools

Fighting chargebacks manually is time-consuming and the win rates reflect it. Industry averages for manual chargeback representation sit at around 12% success rate. Automation tools exist to improve both the efficiency and outcomes of dispute management.

Chargeback automation platforms integrate with your Shopify store and handle the dispute process on your behalf. They typically pull order data, customer information, and fulfillment records automatically, then compile evidence packages tailored to each reason code. Some platforms claim success rates of 65% or higher, significantly above the manual average.

When evaluating chargeback tools for your Shopify store, consider these factors:

• Integration depth: How much data can the tool pull from your Shopify admin automatically?
• Pricing model: Some charge monthly fees, others take a percentage of recovered funds. Percentage-based models mean you only pay when they win.
• Prevention vs recovery: The best tools don't just fight chargebacks after the fact. They also help prevent them through pre-dispute alerts and fraud detection.
• Reporting and analytics: Look for tools that provide insight into your chargeback patterns so you can address root causes, not just symptoms.

Popular options in the Shopify ecosystem include Chargeflow, Disputifier, and Chargeback Gurus. Each has different strengths depending on your store's volume and the types of chargebacks you typically face. You can find several of these directly in the Shopify App Store.

Whether you handle chargebacks manually or use automation, the fundamentals remain the same: strong evidence, fast response times, and proactive prevention will always outperform a reactive approach. For more on running an efficient Shopify operation, browse our full collection of Shopify guides.