Chargebacks and inquiries

If you accept credit cards on your store, then it's likely you need to deal with chargebacks or inquiries. When a cardholder has an issue with a charge on their credit card, they can contact their bank to dispute the charge. The bank then makes a chargeback or inquiry. The cardholder can be one of your customers or someone who believes that their card was used on your store without their permission.

If the cardholder's bank makes a chargeback, then the bank takes the disputed amount from you right away. The cardholder's bank also takes a chargeback fee from you. If the cardholder's bank makes an inquiry, then they don't take the disputed amount or a fee right away.

You can try to resolve the chargeback or inquiry in a few ways. Often, the company that issued the cardholder's credit card reviews any evidence, and then resolves the chargeback in either your favor or the cardholder's favor. If you win the chargeback, then you get the disputed amount back, and Shopify might refund the chargeback fee depending on your country or region. If the cardholder wins the chargeback, then the disputed amount is returned to the cardholder.

If you're using Shopify Payments and you're issued a chargeback, then the amount is deducted from your next available payout.

Insufficient funds with Shopify Payments

If you're using Shopify Payments and you encounter a situation where your payout lacks sufficient funds for a return, then the outcome varies depending on your store's location:

  • Austria, Australia, Belgium, Canada, Czechia, Denmark, Finland, Germany, Ireland, Italy, Netherlands, New Zealand, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States: The balance required for the refund will be debited from your bank account. This debit will occur on a day outside your regular payout schedule.
  • All other countries: The remaining amount needed for the refund will be deducted from subsequent payouts until the refunded amount is fully covered.

Failed debit attempts with Shopify Payments

If the initial debit attempt fails, then a second attempt will be made after 3 business days. If this reattempt also fails, then you will need to change your Shopify Payments bank account or repay the negative balance manually.

Chargeback process

This is the typical process for a chargeback:

  1. The cardholder disputes a credit card charge with their bank.
  2. The cardholder's bank sends a chargeback request to the credit card company, and takes the disputed amount and a chargeback fee from you.
  3. The credit card company asks you for evidence that the charge was valid.
  4. You gather evidence to figure out whether the charge was valid and add it to the chargeback response.
  5. After you complete your chargeback response, you forward it to the credit card company by clicking Submit response.
  6. The credit card company reviews the evidence. The review can take up to 75 days after the response is submitted.
  7. The credit card company resolves the chargeback.

If you win the chargeback, then the cardholder's bank returns the disputed amount to you, and Shopify might refund you the chargeback fee depending on your country or region. If the chargeback is a partial win, then the cardholder's bank returns some of the disputed amount to you, and Shopify still might refund you the chargeback fee. If the cardholder wins the chargeback, then the disputed amount and the fee isn't returned to you.

Chargeback fee

When a bank sends you a chargeback, they also charge you a processing fee. If the chargeback is resolved in your favor, then Shopify might refund this fee depending on your country or region. The following list provides a breakdown of the processing fee by country or region, as well as whether the fee will be refunded if the chargeback is resolved in your favor:

Table of Shopify Payments countries/regions with their associated fees and whether they're refunded if the chargeback is won.
Country/RegionChargeback FeeFee refunded if
chargeback won?
Australia25 AUD
Austria15 EUR
Belgium15 EUR
Canada15 CAD or 15 USD, based on payout currency
Czechia15 EUR or 400 CZK, based on payout currency
Denmark15 EUR or 115 DKK, based on payout currency
Finland15 EUR
France15 EUR
Germany15 EUR
Hong Kong SAR85 HKD
Ireland15 EUR + 23% VAT
Italy15 EUR
Japan1,300 JPY
Netherlands15 EUR
New Zealand20 NZD
Portugal15 EUR
Romania15 EUR or 75 RON, based on payout currency
Singapore15 SGD
Spain15 EUR
Sweden15 EUR or 150 SEK, based on payout currency
Switzerland15 EUR or 15 CHF, based on payout currency
United Kingdom10 GBP
United States15 USD

Inquiry process

This is the typical process for an inquiry:

  1. The cardholder disputes a charge with their bank.
  2. The cardholder's bank sends an inquiry request to the credit card company. The credit card company does not take the disputed amount from you.
  3. The credit card company asks you for evidence that the charge was valid.
  4. You gather evidence to figure out whether the charge was valid and add it to the inquiry response.
  5. After you complete your inquiry response, you forward it to the credit card company by clicking Submit response.
  6. The credit card company reviews the evidence. The review usually takes 65 to 75 days after the transaction is made. In a few cases, the review can take longer than 75 days.
  7. The credit card company resolves the inquiry.

If the inquiry is closed in your favor, then no money is taken. If the cardholder's inquiry is closed in their favor, then the credit card company might proceed with a full chargeback and take the disputed amount, plus the additional chargeback fee.

Resolve a chargeback or inquiry

You can help to resolve a chargeback or inquiry in the following ways:

Contact the customer

You can talk to the customer who made the order by phone or email to try to resolve the issue. If your customer agrees that the chargeback or inquiry isn't necessary, then they must contact their bank and ask them to cancel the chargeback or inquiry. You should then request that they provide you with a copy of the chargeback withdrawal letter from their bank. After you have evidence of the customer requesting to cancel the chargeback, you will need to submit this letter as evidence in the Chargeback response form on the order. Refer to Resolve a chargeback canceled by the customer.

Add additional evidence

After the cardholder's bank makes a chargeback or inquiry, you have a limited time to submit evidence that the charge was valid. The amount of time that you have to submit evidence depends on the credit card company and the reason for the chargeback.

The type of evidence that you should submit depends on the reason that the cardholder asked for a chargeback or inquiry. Keep your evidence relevant and to the point, and consider including the following information:

  • Proof of customer authorization
  • Service provided
  • Item delivery
  • Terms of service and refund policy

If you are adding any document or images, then make sure you have formatted them clearly so that they can be viewed without zooming or cropping. High-contrast images that can be printed clearly in black and white are recommended as many banks receive chargeback evidence through fax machines. Links aren't recommended to send as evidence.

If you use Shopify Payments, then Shopify tools automatically populate available data, which is used to automatically send a response to the credit card company for you on the due date. You can add additional evidence to the response before the due date. The due date is 7 to 21 days after the chargeback or inquiry is filed.

If your store is closed or paused, and you receive an email about a chargeback, then you need to follow the link in the email to log in and pay for a new plan to reopen the store. After you reopen your store, you can submit the additional evidence for the chargeback. If you don't reopen your store, then only basic transactional information is submitted with the chargeback.

If you're using a third-party payment provider, then you should contact your provider to find out how to send evidence to the credit card company.

Accept the chargeback or inquiry

Accept a chargeback

If you think that a chargeback is justified, then you can accept it by not submitting any evidence. The disputed amount is returned to the customer, and you aren't refunded for the chargeback fee.

Issue a refund to end an inquiry

If you think that the reason behind an inquiry is justified, then you can issue a full refund for the order, as no funds are taken by the credit card company during an inquiry. If you issue a partial refund, then a full chargeback can still occur. If you issue a full refund, then the cardholder can't initiate a chargeback. You should also submit evidence that proves you've refunded the customer.

Reasons for a chargeback or inquiry

The type of evidence you should send to the credit card company to resolve a chargeback or inquiry depends on the reason that the customer gave for the chargeback or inquiry. A customer might dispute a charge for one of the following reasons:

Fraudulent

The chargeback is marked as Fraudulent if the cardholder didn’t authorize the charge. This is the most common reason for a chargeback and can happen if the card was stolen.

To deal with a fraudulent charge, you can try to contact the customer who placed the order. The customer might have forgotten about the purchase, or the purchase might have been made by a spouse, friend, or family member. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback. You should still submit evidence to the credit card company, including the statement where the customer said they would drop the charge.

If you think that the customer is mistaken or not telling the truth, then you should submit the following evidence to the credit card company:

  • The date and time that the order was fulfilled
  • The billing information that the customer used
  • The IP address and country used for the order
  • Shipping and tracking information for the order.

If you want to examine all of your orders before they're fulfilled, then you can capture payments manually. Capturing an order's payment manually enables you to view the full fraud analysis for an order before you make the decision to fulfill the order and accept the payment. By reviewing high-risk orders, you can avoid potential chargebacks. Fulfilling high risk orders can result in a higher number of chargebacks. If you receive a high number of chargebacks then payment processing will be deactivated and you might be removed from Shopify Payments.

Credit card companies can reverse funds for stolen cards after orders are fulfilled. Shopify helps you to gather evidence for any disputed charges. However, the decision to reverse funds is made by the bank that issued the credit card, not by Shopify. Shopify does not cover charge reversals from banks.

Unrecognized

The chargeback is marked as Unrecognized if the customer doesn’t recognize the merchant name or location on their credit card statement.

To deal with an unrecognized charge, you should try to contact the customer. Sometimes the customer might have forgotten about the purchase, or the purchase might have been made by a spouse, friend, or family member. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback.

You should still submit evidence to the credit card company, including the statement where the customer said they would drop the charge. You could include some of the following pieces of evidence:

  • The date and time that you fulfilled the order
  • The billing information that the customer used
  • The IP address and country used for the order
  • Shipping and tracking information for the order.

Duplicate

The chargeback is marked as Duplicate if the customer believes that you charged them twice for the same product or service.

If you didn't charge your customer twice, then you should try to get in touch with them. You can explain to them that the two charges were for separate products or services. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback.

If the customer does not drop the chargeback or inquiry after you talk to them, then you need to submit evidence that the two charges were for separate products or services. You could include some of the following pieces of evidence:

  • An explanation of the reason for the two charges
  • Receipts that prove that the two charges were for different products or services
  • Any communication with the customer where you let them know about the two charges

If you did charge your customer twice for the same product or service, then you have to accept the chargeback.

Subscription canceled

The chargeback is marked as Subscription canceled if the customer believes that you charged them for a subscription after it should have been canceled. It can also mean that the customer expected a reminder before each recurring charge but didn’t receive one.

To resolve the chargeback, you should get in touch with your customer. It's possible that you can explain the misunderstanding, or come to an agreement with the customer. If you come to an agreement, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence of this conversation to the credit card company. Refer to Resolve a chargeback canceled by the customer.

If you think the that customer didn't cancel the subscription before the charge, then you should submit evidence to the credit card company that proves that the customer canceled their subscription after the last charge. You could include some of the following pieces of evidence:

  • Your subscription cancellation policy
  • Any emails or notifications sent to the customer about their cancellation
  • An explanation of when and where the customer was informed of the cancellation policy
  • For a digital product or service: an activity log that proves that the customer accessed the product or service after the date when they said they canceled their subscription.

If you did charge your customer after they canceled their subscription, then you have to accept the chargeback.

Product not received

The chargeback is marked as Product not received if the customer believes that they did not receive the goods or services they purchased.

You should try to get in touch with the customer first to figure out the problem. If you can resolve the problem with your customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also include evidence that the customer agreed to drop the chargeback in the response you send to the credit card company. Refer to Resolve a chargeback canceled by the customer.

If you can't resolve the issue with your customer, then you should submit evidence to the credit card company that proves that the customer received the product or service before the chargeback was made. You could include some of the following pieces of evidence:

  • The date and time that you fulfilled the order
  • The billing information that the customer used
  • Shipping and tracking information for the order
  • For a digital product or service: an activity log that proves that the customer accessed the product or service.

Product unacceptable

The chargeback is marked as Product unacceptable if the customer feels that the product was received but was defective, damaged, or not as described.

Start by trying to get in touch with the customer. If you can resolve the problem with the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence to the credit card company that the customer agreed to drop the charge. Refer to Resolve a chargeback canceled by the customer.

If the customer didn't try to return the product or cancel the service before the chargeback was made, or if you provided the customer with a replacement product or service, then send evidence of that as well.

Whether you resolve the issue with the customer or not, you should still send any relevant evidence to the credit card company. You could include some of the following pieces of evidence:

  • The date and time that you fulfilled the order
  • The billing information that the customer used
  • Shipping and tracking information for the order
  • Descriptions or pictures of the products from your store that prove that they were as described.

Credit not processed

The chargeback is marked as Credit not processed if the customer informed you that the purchased product was returned or that the transaction with you was canceled, but you have not yet refunded or credited the customer.

Start by trying to get in touch with the customer. You can't issue a refund after a chargeback has been made, but you might be able to explain the situation or figure out another way to solve the problem. If the customer asked for an inquiry, then you can issue a refund. If you can resolve the problem with the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback or inquiry. You should also send evidence to the credit card company that the customer agreed to drop the chargeback. Refer to Resolve a chargeback canceled by the customer.

If you can't resolve the issue, and you think that the chargeback isn't valid, then you should send evidence to the credit card company that you either gave the customer a refund before the chargeback or inquiry was made, or that the customer was not entitled to a refund. You could include some of the following pieces of evidence:

  • Your refund and return policies
  • An explanation of when and where the customer was informed of the refund policy
  • Any emails or notifications you sent to the customer about the refund
  • An explanation of why the customer was not entitled to a refund.

General

A chargeback is marked as General if it doesn't fit into one of the other categories.

To resolve a general chargeback, you should start by trying to contact the customer so you can figure out what the problem is. If you can solve the problem for the customer, then you should tell the customer to contact their bank and say that they want to cancel the chargeback. You should then request that they provide you with a copy of the chargeback withdrawal letter from their bank. After you have evidence of the customer requesting to cancel the chargeback, you will need to submit this letter as evidence in the Chargeback response form on the order. Refer to Resolve a chargeback canceled by the customer.

If the customer doesn't want to drop the chargeback, then you should send evidence to the credit card company that the charge was valid. You could include some of the following pieces of evidence:

  • Details about the products that were ordered
  • The date and time that the order was fulfilled
  • The customer's billing information
  • The customer's IP address and country
  • Emails or other communication you had with the customer
  • USPS/FedEx/UPS or other online tracking or shipping confirmations
  • Proof of prior refunds or replacement shipments.

Resolve a chargeback canceled by the customer

Even when a cardholder has already contacted their bank to cancel the chargeback, the dispute process often involves more than one banking entity, which means that the chargeback can remain active in your Shopify admin. It's extremely important to submit evidence in all chargeback cases, even if your customer says they have canceled the chargeback.

You'll need to get a withdrawal letter from the customer, which you'll then submit as evidence to the chargeback to be processed by the appropriate banking entities before the chargeback will completely resolve in your admin.

Steps:

  1. The cardholder will need to request a withdrawal letter from their credit card company, and send it to you. The documentation provided by the customer must meet all of the following requirements:
    • It must be on official bank letterhead
    • It must display the case number
    • It must confirm the original charge date/amount
    • It must confirm your shop/business name
    • It must confirm that the chargeback has been canceled
    • It must confirm that the funds have been re-debited from the customer's account
    • It must confirm that the funds have been returned to you, the merchant
  2. You need to submit this letter as dispute evidence within the Chargeback response submission form on the order.
    1. If the deadline to submit chargeback evidence has passed, then refer to lost chargebacks.
  3. Wait for the banking entities involved to review and update the chargeback on their end. The timeline for this depends on the involved banks' processes and can take up to 30-90 days or sooner.

If your customer agreed to cancel the chargeback in exchange for a refund for the order, then ensure that you keep your customer informed during this time period. Reassure them that you need to wait for this to be officially resolved before you can issue a refund.

After the chargeback is resolved, you can refund the order. Set the expectation with your customer that it normally takes 5-10 business days for the bank to process a refund.

Chargeback is listed as Lost or is still under review

If the deadline to submit evidence has passed, then the chargeback status might display as Lost or Under review. When the customer has canceled the chargeback and provided you the chargeback withdrawal documentation, then contact Shopify Support for next steps.

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