Preventing chargebacks — best practices

4 min read

Quick answer #

Most chargebacks are preventable. Three things matter most: be findable and responsive when customers want to contact you (so they don’t go to their bank instead), use a clear statement descriptor so customers recognise charges, and capture good proof of every transaction (delivery confirmation, IP, customer agreement) so you can win the chargebacks you do receive. A chargeback rate under 0.5% is healthy; over 1% triggers card-network monitoring.

Why customers chargeback instead of asking for a refund #

This is the most important thing to understand: customers usually try to resolve issues with merchants first. They only escalate to a chargeback if they can’t reach you, don’t recognise the charge, or feel they’ve been ignored.

The single biggest chargeback-prevention lever is being responsive. Most chargebacks are preceded by a customer trying to contact the merchant — sometimes through email, sometimes through your website’s contact form, sometimes through social media. If you respond within 24 hours, you can usually resolve the issue with a refund or store credit, both of which cost you far less than a chargeback.

Five practices that prevent the most chargebacks #

1. Use a clear statement descriptor #

The descriptor is what appears on the customer’s bank statement next to the transaction amount. By default, Pay@ Gateway uses “PAYAT GATEWAY” plus your business name. If your customers see “PAYAT GATEWAY” but bought from “Sandy’s Cupcakes”, they may not recognise the charge and dispute it as fraud.

Configure the descriptor in your dashboard to match the trading name your customers know. For Sandy’s Cupcakes, the descriptor should say “SANDYS CUPCAKES” or “SANDY CUPCAKES JHB” — something the customer will recognise on their statement.

2. Be findable #

Put your contact information in five places where a confused customer will look:

On every page of your website
In the order confirmation email
In the shipping confirmation email
On the customer’s invoice or receipt
In any packaging that goes out with the product

A customer who can find your WhatsApp number won’t disputes a transaction with their bank. A customer who can’t find any way to contact you, will.

3. Set clear delivery expectations #

The “product not received” chargeback is one of the most common. Prevent it by:

Telling the customer the delivery date at the point of purchase
Sending a shipping confirmation with a tracking number
Sending a “your order has arrived” email if you can detect delivery
Following up proactively if delivery is delayed

If you can’t deliver in time, contact the customer first. They’ll almost always wait if you’re upfront about it.

4. Make refunds easy #

A customer who can get a refund easily will not chargeback. A customer who feels they have to fight you for a refund, will. Your refund policy should be:

Visible on your website (not buried in terms and conditions)
Stated in plain language
Reasonable for your industry (most ecommerce works on 14-day returns)
Actually honoured when invoked

Pay@ Gateway doesn’t charge you a refund fee on the Online plan, so there’s no cost reason to make refunds difficult.

5. Capture proof for high-value transactions #

For any transaction above your normal average, capture more evidence than the gateway records automatically:

A signed delivery confirmation
The IP address and device used to place the order
Email correspondence confirming the customer’s intent
Screenshots of the customer’s account or order page if relevant

This evidence is what you submit if a chargeback is initiated. The more concrete and specific, the better your chances of winning the dispute.

Chargeback rate — what’s healthy #

Card networks track your chargeback rate as a percentage of your total transactions. The targets to aim for:

Under 0.5% — healthy, no monitoring
0.5% – 0.9% — within tolerance, worth investigating the cause
1.0% – 1.5% — you’ll likely be flagged for monitoring by Visa or Mastercard
Over 1.5% — high risk, may face increased fees or merchant account review

For perspective: an SME doing 200 transactions a month should expect 0–2 chargebacks. More than 2 a month suggests something specific is going wrong — a particular product, a particular sales channel, or a customer-service gap.

When chargebacks spike #

If your chargeback rate suddenly increases, look at what changed:

Did you launch a new product or campaign?
Did delivery times get longer?
Did your customer service response time slow down?
Is there a specific product attracting most of the disputes?
Are the chargebacks clustered around a specific date range?

The pattern almost always points to a fixable root cause.