Chargebacks Explained: How to Prevent and Fight Them (2026)
A chargeback is when a customer goes to their bank, not to you, to get their money back. The bank takes the money from your account while it looks into the dispute, and your provider may charge you a fee on top. Even if you win, it's time and stress you didn't need.
The good news is that most chargebacks are avoidable, and many can be won with the right evidence. Here's how they work and what to do about them.
What is a chargeback?
A chargeback reverses a card payment through the card scheme, such as Visa or Mastercard. It's a protection for cardholders, designed for cases where something has genuinely gone wrong: fraud, goods that never arrived or a service that wasn't provided.
The process roughly goes:
- The customer contacts their bank to dispute a payment.
- The bank raises a chargeback through the card scheme.
- Your provider tells you and usually takes the disputed amount from your balance.
- You're asked for evidence within a deadline.
- The customer's bank decides. If you win, the money comes back. If you lose, it stays with the customer.
Chargeback vs refund
| Refund | Chargeback | |
|---|---|---|
| Who starts it | You | The customer's bank |
| Cost | Sometimes a small fee | Often a fee, plus the payment amount |
| Time | Quick | Can take weeks |
| Effect on your account | None | Too many can lead to higher fees or account closure |
If a customer has a fair complaint, a refund is almost always cheaper and quicker than a chargeback.
What chargebacks cost
Many providers charge a fee per chargeback, whether or not you win. Examples from official UK pages, checked October 2026:
| Provider | Chargeback or dispute fee |
|---|---|
| Stripe | £20 per dispute |
| Paymentsense (example pricing) | £28 |
| Viva | £20 per lost transaction |
Fees vary, so check your own provider's price list. On top of the fee, you lose the sale amount if the dispute goes against you, and sometimes the goods too.
Common reasons for chargebacks
- Fraud. The real cardholder didn't make the payment. Most common online and over the phone.
- Goods not received. The parcel went missing or the customer says it did.
- Not as described. The customer says the item was different from what was advertised.
- Cancelled service or subscription. The customer believes they cancelled but was still charged.
- Duplicate payment. The card was charged twice by mistake.
- Unrecognised payment. The customer doesn't recognise your business name on their statement. This is called "friendly fraud" when the customer did make the purchase but forgot.
How to prevent chargebacks
Use the right payment method. In person, chip and PIN or contactless payments where the customer is present are much harder to dispute as fraud. Online, use your provider's fraud tools and strong customer authentication.
Make your business name recognisable. Check how your name appears on customers' bank statements. If it's a limited company name customers won't know, ask your provider whether you can change the descriptor to your trading name.
Give clear receipts. Email or text receipts with your business name, contact details and what was bought.
Have a clear refund policy. Show it at the till, on your website and on receipts. Customers who know how to get a refund from you are less likely to go to their bank.
Be easy to contact. Answer emails and calls quickly. Many chargebacks start with a customer who couldn't reach you.
Get proof of delivery. Use tracked delivery for valuable items and keep the tracking details.
Get signed agreements for bigger jobs. For trades and services, a signed quote or job sheet showing what was agreed helps.
Take deposits properly. Make it clear when deposits are non refundable and get the customer to agree in writing.
Don't take card details on paper. Use a virtual terminal or payment link for phone orders.
How to fight a chargeback
If you think a chargeback is unfair, respond, and don't miss the deadline. Your provider will tell you how long you've got.
Gather evidence such as:
- The receipt or transaction record.
- Proof the customer was present, such as a chip and PIN record.
- Signed quotes, job sheets or contracts.
- Proof of delivery or collection.
- Emails or messages with the customer.
- Photos of the goods or completed work.
- Your terms and refund policy, and proof the customer saw them.
Write a short, factual summary. Stick to what happened and link it to your evidence. Don't get emotional or argue about the customer's character.
What to do the day a chargeback arrives
- Read the notice carefully. Note the amount, the reason given and the deadline.
- Find the transaction. Match it in your app or statement by date, time and amount.
- Check whether the customer contacted you. Look through emails, messages and call logs.
- Decide whether to accept or fight. If the customer has a point, accepting may be simpler. If not, start gathering evidence.
- Collect your evidence. Use the list above.
- Submit before the deadline. Late responses usually lose automatically.
- Make a note of what went wrong. Was it a confusing descriptor, a slow reply or a missing tracking number? Fix it so it doesn't happen again.
A simple response template
You can adapt something like this when you submit your evidence:
On [date], the customer bought [item or service] for £[amount] at [location or website]. The payment was taken by [chip and PIN, contactless or online with authentication]. [The goods were collected in person / delivered on (date), tracking number (number) / the work was completed on (date)]. The customer [signed the job sheet / confirmed by message / did not contact us before raising the dispute]. Our refund policy is shown [at the till / on our website / on the receipt]. Attached are the receipt, [proof of delivery / signed job sheet / messages] and our terms.
Keep it short. The person reviewing it will have many cases to look at. Clear evidence beats a long story every time.
How long it takes
Chargebacks aren't quick. The time from the customer raising a dispute to a final decision can stretch to weeks or even months, depending on the card scheme and whether either side challenges the first decision. Your provider will keep you updated. In the meantime, the disputed money is usually held, so plan your cash flow accordingly.
Real world examples
A café. A customer disputes a £14 lunch, saying they didn't recognise the payment. The café shows the contactless transaction record and its trading name matches the receipt. Strong case, but the fee may be more than the sale. Many small businesses still fight it on principle, and to keep their chargeback rate down.
A plumber. A customer disputes £600, saying the work wasn't completed. The plumber has a signed job sheet, before and after photos and a text from the customer saying thanks. Good evidence.
An online shop. A customer says a £75 parcel never arrived. The shop used untracked post. Weak case. Tracked delivery would have helped.
Why your chargeback rate matters
Card schemes and providers watch how many chargebacks a business gets compared with its total payments. Too many can lead to:
- Higher fees.
- Money held back from your payouts as a reserve.
- Your account being closed.
Businesses with lots of chargebacks may be classed as high risk. Our guide to high risk merchant account providers explains what that means.
Chargebacks by business type
| Business | Main risk | Best defence |
|---|---|---|
| Shops and cafés | Unrecognised payments | Clear trading name on statements, receipts |
| Online shops | Fraud, non delivery | Fraud checks, tracked delivery |
| Trades | Disputes about the work | Signed quotes, photos, job sheets |
| Hospitality bookings | No shows, cancellations | Clear deposit terms, agreed in writing |
| Subscriptions | Forgotten renewals | Reminder emails, easy cancellation |
FAQs
What is a chargeback in simple terms?
It's when a customer asks their bank to reverse a card payment, rather than asking you for a refund.
How long does a customer have to raise a chargeback?
It depends on the card scheme and the reason, and can be several months after the payment. Keep your records for at least that long.
Do I always lose the money?
No. If you provide good evidence and the bank agrees, the money is returned. But you may still pay a chargeback fee.
Can I stop a chargeback?
You can't stop a customer raising one, but you can often prevent it by offering a refund first or making it easy to contact you.
Should I refund a customer who threatens a chargeback?
If their complaint is fair, yes. A refund is usually cheaper than a chargeback and its fee.
Do chargebacks affect my card machine account?
Yes, if you get lots of them. Providers may raise your fees, hold back some of your payouts or close your account.
What's the difference between a chargeback and fraud?
Fraud is one reason for a chargeback, when the real cardholder didn't make the payment. But chargebacks can also be raised for other reasons, such as goods not arriving or a service not being provided.
Does chip and PIN protect me from chargebacks?
It helps a lot against fraud claims, because it shows the genuine card and PIN were used. It won't protect you against disputes about the goods or service themselves.