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What exactly is a chargeback?
A chargeback is a payment reversal your customer requests not from you, but from their bank or payment provider. The customer tells them the payment was not right and asks for their money back. Depending on the payment method, that party is their bank, their card issuer or a provider such as PayPal or Klarna. The amount is then pulled out of your account before you get any say in it. Only afterwards do you get to prove the payment was legitimate.
That is the essential difference with an ordinary refund: with a refund you stay in control, with a chargeback the burden of proof is on you and the money has already gone. For online stores and dropshippers this is one of the most expensive and most underestimated costs there is.
STEP 1Customer files itWith their bank or payment provider
STEP 2The money goes backPlus a chargeback fee for you
STEP 3You respond with evidenceUsually within 10 to 20 days, with proof
STEP 4The provider decidesWon: money returned. Lost: everything gone
Chargeback, refund and dispute: the difference
The terms get used interchangeably, but the distinction decides who is in control and what it costs you.
| Term | Who decides | What it costs you |
|---|---|---|
| Refund | You, voluntarily | The order value, nothing more |
| Dispute | The payment provider, after both sides respond | Nothing if you win, the order value if you lose |
| Chargeback | The bank or the card network | Order value plus a chargeback fee, and your ratio goes up |
Rule of thumb: a customer you help in time becomes a refund or a happy customer. A customer who gets no reply becomes a dispute or a chargeback. Your email response time is literally your cheapest chargeback prevention.
What does a chargeback really cost your store?
The damage is always bigger than the order value. Count everything that actually disappears:
- The order value, reversed immediately.
- The chargeback fee from your payment provider, typically between EUR 15 and EUR 40 per case, even when you win.
- The product, usually already shipped or delivered, and rarely returned.
- The handling time: gathering evidence, filling in forms, tracking deadlines.
- Your chargeback ratio, the silent killer: card networks step in at around 0.9 to 1 percent of your transactions. Above that come fines, higher rates and eventually the loss of your payment methods.
In short
One chargeback on a EUR 60 order quickly costs you EUR 140 to 180
At ten chargebacks a month that is thousands of euros a year, before you even count the ratio risk.
The 5 most common causes
- No reply to their email. The customer emailed you first, heard nothing for days and then went to their bank or payment provider. By far the most avoidable cause.
- Delivery took longer than expected. Especially in dropshipping: the customer has no idea where the parcel is and concludes they have been scammed. More on this in our article on dropshipping customer service.
- An unrecognisable charge. The bank statement shows a different name than your store, and the customer simply does not recognise the payment.
- The product was not what they expected. The photo promised more than the box contained, or the size and colour were off.
- Friendly fraud. The customer received everything but files a claim anyway. Annoying, but this is exactly the category you can win with watertight evidence.
Seven ways to prevent chargebacks
- Answer every customer email within 24 hours. Almost every chargeback starts life as an unanswered email. Reply quickly and you catch the dispute before the bank ever gets involved.
- Be honest about delivery times, on the product page, in the checkout and in the confirmation email. Underpromise and overdeliver.
- Ship everything with tracking and share the link proactively. It removes the uncertainty and later becomes your single most important piece of evidence.
- Make sure your billing descriptor matches your store name, which you set at your payment provider. This one field wipes out the entire unrecognised-charge category.
- Send a dispatch and delivery confirmation. Every proactive email is one customer question fewer and one piece of evidence more.
- Make returning easier than claiming. A clear returns page with a simple process sends hesitant customers to the cheap channel instead of to their bank.
- Monitor your disputes in one place. You will miss ten-day deadlines if PayPal, Klarna and Stripe each live in their own dashboard. Track them centrally, or have someone do it for you.
Got a dispute anyway? How to win it
Even with perfect prevention you will still get disputes. Then only one thing counts: responding fast and in full, following that specific provider's procedure. Each of them has its own deadlines and its own evidence requirements:
| Payment method | Deadlines (indicative) | What makes the difference |
|---|---|---|
| PayPal | Buyers can open a dispute up to 180 days after payment; you usually respond within 10 days | Tracking and the complete message history. See the PayPal dispute playbook |
| Credit card (Visa, Mastercard) | A chargeback is usually possible up to 120 days after the transaction | Proof of delivery and a recognisable billing descriptor |
| Klarna | The payment is paused while the dispute runs | Respond quickly; if you do not respond at all, you lose automatically |
| iDEAL | No chargeback right: an iDEAL payment is final | Disputes here run through your own support, not through the bank |
The winning response is always the same recipe: the right evidence, in the right format, within the deadline. Tracking, the accepted terms, the product page as the customer saw it and the complete email exchange. Do that consistently and you win most cases; we win an average of 88 percent of them for our clients.
The biggest mistake: letting the deadline pass. A dispute with no response is automatically lost, even when you were entirely in the right. Stores lose more disputes to missed deadlines than to weak evidence.
Frequently asked questions
What is a chargeback?
A chargeback is a payment reversal your customer requests from their bank or payment provider instead of from you. That party takes the amount back out of your account and you then have to show the payment was legitimate. The difference with a refund is who is in control: with a refund you decide, with a chargeback a third party does.
What does chargeback mean?
Chargeback means a forced payment reversal: the card network or bank takes money back from the merchant and returns it to the cardholder. It is sometimes called a payment dispute or a card dispute, after the dispute form the customer fills in at their card issuer. In Dutch the term is terugboeking.
How long does a customer have to file a chargeback?
That depends on the payment method. For credit cards it is usually up to 120 days after the transaction; with PayPal a buyer can open a dispute up to 180 days after payment. iDEAL has no chargeback right at all: it is a direct bank transfer and the buyer cannot reverse it.
What does a chargeback cost an online store?
On top of the reversed amount, the payment provider charges a chargeback fee, often between EUR 15 and EUR 40 per case. Add the product, which is usually already shipped, and the handling time. Reckon on two to three times the order value in total damage; on a EUR 60 order that works out at roughly EUR 140 to 180.
Can I fight a chargeback?
Yes. Every payment provider has a representment procedure in which you submit evidence such as tracking, customer communication and the accepted terms. The deadlines are short, often 10 to 20 days, so responding fast and in full is decisive. Flowdesk wins an average of 88 percent of the disputes it handles for online stores.
What is the difference between a chargeback and a refund?
With a refund you pay back voluntarily and stay in control; it costs you only the order value. With a chargeback the customer claims the money from their bank or payment provider, the amount is reversed without consulting you, and a chargeback fee is added. On top of that, a chargeback counts towards your chargeback ratio and a refund does not.
How long does a chargeback take?
With a provider like PayPal or Klarna a dispute is often decided within two to six weeks. A true credit card chargeback runs through the card network and takes longer, usually six weeks to a few months. Throughout that time the money is already out of your account; you only get it back if you win.
What is friendly fraud?
Friendly fraud is a chargeback filed by a customer who did receive the product but claims something was wrong anyway, for example because they do not recognise the charge or regret the purchase. It is one of the biggest sources of chargebacks and one of the most winnable, provided you have watertight proof of delivery.
At what chargeback ratio do I get into trouble?
Card networks run monitoring programmes that kick in at around a 0.9 to 1 percent chargeback ratio. Go above that and you face fines, higher rates and, in the worst case, losing your payment methods altogether.
How do I calculate my chargeback ratio?
Divide the number of chargebacks in a month by the total number of transactions in that same month and multiply by a hundred. Five chargebacks on a thousand transactions is therefore 0.5 percent. Note that card networks count per brand and per month, so split your figures by payment method rather than adding everything together.
Do I get my product back after a chargeback?
Rarely. In a chargeback for non-delivery the parcel is often still in transit or with the customer, and there is no obligation to return it. If a customer wins a dispute because the product did not match the description, the provider usually does require them to send it back before they get their money. Ask for that explicitly in your response.
Can a customer reverse an iDEAL payment?
No. iDEAL is a direct bank-to-bank transfer with no chargeback right, so the customer cannot claim the money back through their bank. Any discussion about an iDEAL order therefore runs entirely through your own customer service, which is a good reason to set that up properly.
Sources and further reading
Fact-checked by Luuk, Head of Client Success at Flowdesk. Luuk handles disputes for online stores at PayPal, Klarna, Stripe and Mollie every day and reviews every knowledge base article for accuracy and currency. Last checked: 11 August 2026.
Wessel
Ecommerce backend specialist
Wessel builds the systems, automations and processes behind Flowdesk and writes in the knowledge base about disputes, chargebacks and customer service for online stores. His articles are based on the hundreds of disputes the Flowdesk team handles every month for online stores and dropshippers. Questions about this article: info@flowdeskagency.com.
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