The Complete Guide to Chargebacks on Shopify | From Causes and Countermeasures to Effective Prevention Strategies

One risk that's unavoidable when running an e-commerce site is the "chargeback." When a chargeback occurs, it can result in unexpected revenue loss and response costs. However, by understanding the mechanism, causes, and correct response methods, you can minimize the risk.

This article explains, in an easy-to-understand way, the basics of chargebacks on Shopify, how to process them, and how to prevent them. Shopify store operators should be sure to use this as a reference.

What Is a Chargeback on Shopify?

A chargeback is a mechanism in which a credit card holder (the buyer), for some reason, disputes payment for a card charge with their credit card company, and the card company reverses the sale and refunds the buyer.

Whereas a normal "refund" is processed with the agreement of both the store and the buyer, a chargeback differs in that it proceeds based on the buyer's dispute, led by the card company.

On Shopify stores as well, this kind of chargeback can occur when a credit card payment is made. If you use Shopify Payments, you'll be notified in the Shopify admin when a chargeback occurs, and you'll need to respond from there (accept it, dispute it, etc.). For store operators, this is a very important issue, as it carries the possibility of having sales revenue unilaterally reversed.

Causes of Chargebacks on Shopify

Chargebacks occur for a variety of reasons, but the main cases include the following.

• Store error Cases where the store is at fault, such as failing to ship a product or shipping the wrong item.
• Fraudulent use Cases where a stolen credit card or fraudulently obtained card information is used by a third party.
• Dissatisfaction with the product/service Cases caused by the buyer's dissatisfaction with the product or service provided, such as "the item I received was damaged," "the actual item was significantly different from the description," or "I didn't receive the service I expected."
• Item not received Cases where the buyer claims that "I ordered a product, but it never arrived no matter how long I wait." Caused by shipping delays, carrier errors, or an incorrect address.
• Billing issues Cases caused by billing-related trouble, such as "I returned the item but wasn't refunded," "I was charged twice," or "the charges keep coming even though I cancelled my subscription."
• Buyer forgetfulness or misunderstanding Cases where the buyer themselves forgets having placed the order, or where a family member used it without their knowledge, leading to a dispute over "a charge I don't recognize."
• Friendly fraud Cases where the buyer claims "the product never arrived" (when it actually did) or "the service was unsatisfactory" (in order to get a refund after having used the service), and skips out on payment. The store loses both the product and the payment, suffering serious damage.

The Chargeback Process

When a chargeback occurs, the process generally proceeds as follows. Since the response deadline is extremely important, be sure to understand the flow accurately.

1. The buyer disputes the charge with their card company The buyer notices unauthorized use or an issue by reviewing their card statement, and applies to their card company to reverse the payment.
2. The card company notifies Shopify The card company receives the buyer's dispute and notifies Shopify, which processes the payment on the store's behalf, of the chargeback.
3. Shopify notifies the store & temporarily holds funds Shopify notifies the store owner of the chargeback via email and in the admin. At this point, the sales amount subject to the chargeback is temporarily deducted from the store's sales.
4. The store disputes the chargeback (time-limited) If the store owner believes the reason for the chargeback is unjustified, they can dispute it by submitting counter-evidence. If they don't respond within the deadline, the store automatically loses.
5. Final decision by the card company Based on the counter-evidence submitted, the card company makes a final decision.
6. Notification of the result
   • If the store's dispute is accepted The temporarily held sales revenue is returned to the store.
   • If the store's dispute is not accepted The store's claim is not accepted, the sales revenue is refunded to the buyer, and the store's loss is finalized.

Upon receiving a chargeback notification, the most important thing is to stay calm, first check the details in the admin, and respond promptly within the specified deadline.

Fees Involved in a Chargeback

When a chargeback occurs on Shopify, a "chargeback fee" is incurred separately from the sales amount in question.

This fee is temporarily deducted from the store owner's account at the time the chargeback notification is issued. The amount varies by country or region, but for stores in Japan, it's 1,300 yen per chargeback.

If the store's dispute is accepted, the chargeback fee is fully refunded in addition to the held sales revenue.

※This information is based on data as of July 2025.

How to Handle a Chargeback That Occurs on Shopify

If a chargeback occurs, it's important to respond promptly and accurately. This section explains concrete response methods when a chargeback occurs, along with points for successfully winning a dispute.

What to Do First When You Receive a Chargeback Notification

Seeing a chargeback notification might make you panic. First, stay calm and start by accurately grasping the situation using the following steps.

1. Accurately review the notification details In the Shopify admin, be sure to check the following information.

   • Reason for the chargeback: "unauthorized use," "item not received," etc. — why was it charged back?
   • Target order information: which order is affected?
   • Deadline for submitting counter-evidence: The most important item. Once this date passes, you lose the opportunity to dispute it.
   • Chargeback amount: how much is being held?

2. Thoroughly investigate the target order information Thoroughly review every detail of the target order in the Shopify admin and look for anything that supports the store's legitimacy.

   • Customer information (name, email address, shipping address, billing address)
   • IP address used for the order
   • Delivery status (tracking number, delivery-completion record)
   • Past correspondence with the customer (emails or inquiry history)

3. Decide on a response policy Based on the investigation results, decide how to respond.

   • Accept the chargeback
   • Contact the customer and have them withdraw the chargeback
   • File a dispute

   If there's a clear fault on the store's side (such as forgetting to ship the product), accept the chargeback. Also, if you can't gather enough evidence for the dispute to be accepted, accepting it may be a reasonable judgment call, considering the time and effort involved.

   Note that if you contact the customer individually to work something out (such as offering a replacement product) and get their agreement, you may also be able to have the chargeback withdrawn.

Preparing Evidence to Win a Dispute

To win a dispute, you need to show the card company — a third party — objective evidence that "the transaction was conducted legitimately."

Below are examples of chargeback reasons and the evidence you should prepare.

It's important to organize this information and present it in a way that's easy for anyone to understand.

Note that there are cases where a dispute isn't accepted even after submitting sufficient evidence. The card company's decision is final and generally cannot be overturned. In that case, focus on accepting the loss and taking measures to prevent recurrence.

4 Chargeback Countermeasures for Shopify

While how you respond after a chargeback occurs is important, the most effective approach is to "prevent it before it happens." In your day-to-day store operations, take preventive measures to reduce the risk of fraudulent orders and eliminate misunderstandings from customers. Here are 4 concrete chargeback countermeasures you can implement right away.

1. Automated Countermeasure Setup Using Shopify Flow or Fraud-Prevention Apps

There's a limit to how much you can monitor suspicious orders with human eyes alone. Leverage Shopify's convenient features to automate and streamline fraud detection and response.

• Using Shopify Flow Shopify Flow is an official app that automatically executes a preset action triggered by a specific event. You can create a workflow that immediately emails the person in charge when an order is flagged as "high risk" by Shopify's fraud analysis.
• Introducing a fraud-prevention app Introduce a fraud-prevention app offered on the Shopify store. Fraud-prevention apps can score the risk of an order through multi-faceted analysis — such as the IP address location, whether a proxy server was used, and cross-referencing against past fraud databases — and automatically cancel high-risk orders.

2. Enable Fraud-Prevention Settings on Your Payment Gateway

For example, Shopify's standard payment gateway, "Shopify Payments," comes with basic security features to prevent fraud.

• Address Verification System (AVS): Verifies whether the postal code of the billing address entered by the buyer matches the information registered with the card company
• Security code (CVV): A setting that requires entry of the 3- or 4-digit security code (CVV) printed on the back of the credit card

You can enable either AVS or CVV in the Shopify Payments admin under "Settings" > "Payments." Using these can help prevent fraudulent orders.

3. Create a Clear Refund Policy

Customer dissatisfaction or confusion — such as "the product I received wasn't what I expected" or "I want to return it but don't know how" — can lead to chargebacks. To prevent this, it's important to clearly present rules that anyone can understand in advance.

For example, be sure to state the following kinds of details in your policy.

• Conditions for accepting returns/exchanges (e.g., within 7 days of receiving the item, unused/unopened items only)
• Cases where returns/exchanges aren't accepted (e.g., sale items, made-to-order items)
• The refund process and how long it takes
• Who bears the shipping cost for returns

Place a link to the policy somewhere easily accessible from every page, such as the site footer. A clear policy not only reassures customers, but can also serve as strong evidence — "the store had clearly stated the rules in advance" — should you ever need to dispute a chargeback.

4. Strengthen Customer Communication

Ultimately, the most effective way to prevent chargebacks is a good relationship with your customers. Thoughtful communication removes customer anxiety and builds trust in your store.

• Communication before the order
  • Show product photos from multiple angles and write specific, concrete descriptions to eliminate room for misunderstanding.
  • Set up a chat or inquiry form so customers can easily get answers to questions before purchasing.
• Communication after the order
  • Once you ship a product, always send a shipping notification email that includes the tracking number.
  • If an unexpected shipping delay occurs, communicate the situation honestly and apologize courteously.
• Communication after a chargeback notification
  • Propose things like shipping a replacement product, and ask the customer to withdraw the chargeback.

When a customer feels some kind of dissatisfaction, the first place they contact should be your store — not the card company. Responding to inquiries promptly and sincerely can resolve the issue before it escalates into a chargeback.

Start Building Your Shopify Store's Chargeback Countermeasures

This article explained the "chargeback" issue that's unavoidable when running a Shopify store, from its basic mechanism to concrete countermeasures.

Chargebacks occur for a variety of reasons — not just fraudulent use, but also customer misunderstandings or lack of communication. Once they occur, in addition to losing sales revenue and fees, you may also lose the product itself, which can seriously impact your store's cash flow and reputation.

That's why proactive measures — introducing a fraud-detection app, establishing a clear refund policy, and providing thoughtful customer support — are essential.

Put into practice the measures you can start today, one at a time, and build a Shopify store that's resilient to chargeback risk.