At Beacon Payments, we work with merchants every day to reduce chargebacks and protect hard-earned revenue. In this post, we’ll explain what chargebacks are, why they happen, and most importantly, how you can prevent them.

What Is a Chargeback?

A chargeback occurs when a cardholder disputes a transaction with their bank or credit card company. If the dispute is accepted, the funds from that transaction are pulled from the merchant’s account and returned to the customer—often along with a chargeback fee of $15 to $25 (or more).

Chargebacks were originally designed to protect consumers from fraud—but today, they’re often used in cases of buyer’s remorse or even intentional abuse (also known as "friendly fraud").

Common Reasons for Chargebacks

Understanding why chargebacks happen is the first step in preventing them. Common causes include:

• Fraudulent Transactions – Stolen card or identity theft
• Unrecognized Charges – Customer doesn’t recognize your billing descriptor
• Product Not Received – Especially common with online sales
• Product Not as Described – Customer claims item didn’t match expectations
• Double Billing – Customer was charged twice
• Refund Not Processed – Customer returned the item but didn’t get their money back

Chargeback Prevention Tips for Merchants

✅ 1. Use Clear Billing Descriptors

Make sure your business name and contact info appear clearly on the customer’s credit card statement. A confusing descriptor is one of the most common reasons for chargebacks.

✅ 2. Communicate Clearly and Proactively

• Confirm all orders with an email or receipt
• Clearly state your refund, return, and cancellation policies
• Provide delivery timelines and tracking information
• Offer customer support channels that are easy to access

A quick customer service response can often resolve an issue before it escalates into a chargeback.

✅ 3. Use Address Verification (AVS) and CVV Matching

AVS checks the billing address against the cardholder’s information, and CVV codes verify that the card is in the buyer’s possession. These simple tools help prevent fraudulent transactions.

Beacon Payments’ systems include AVS and CVV matching as part of our standard fraud prevention tools.

✅ 4. Offer Digital Receipts and Proof of Delivery

Keep a paper trail:

• Email receipts with transaction details
• Require signatures for high-ticket items
• Use shipping confirmation and tracking numbers
• Save records of customer communication

This documentation is your defense if a dispute arises.

✅ 5. Monitor for Suspicious Activity

Watch for:

• Unusually large orders
• Mismatched billing and shipping addresses
• Multiple declined transactions
• Rush shipping requests

These can all be red flags for fraud.

✅ 6. Respond to Chargebacks Promptly and Accurately

If a chargeback is filed, you’ll have a chance to submit evidence to dispute the claim. Respond quickly, provide complete documentation, and use your processor’s portal to track deadlines.

At Beacon Payments, we help our merchants navigate the chargeback process and provide guidance on how to respond effectively.

✅ 7. Use Tap-to-Pay or EMV Terminals

For in-person transactions, using EMV chip readers and contactless tap-to-pay technology helps prove card-present activity and shifts liability away from your business in many fraud cases.

Bonus: Consider Recurring Billing Tools

If your business uses subscriptions or auto-billing, be sure to:

• Get explicit authorization from the customer
• Remind customers before billing them for renewals
• Make it easy to cancel

This helps reduce “I didn’t agree to this charge” disputes.

Final Thoughts

Chargebacks can be costly and disruptive—but with the right tools, processes, and communication, you can reduce your exposure and keep your revenue safe.

Need help lowering your chargeback rate or upgrading your payment security?
Contact Beacon Payments today for a free consultation and risk review. We’ll help you protect your business and your bottom line.