1. What does chargeback mean?

A chargeback is a request made by a cardholder for a refund from their bank. When a customer is not satisfied with the product/service’s quality or cannot recognize a particular transaction, he has the right to refuse it and demand a chargeback. The credit-card provider, which in this case is the bank, will then immediately undo the transaction and investigate the situation to decide who wins the case. The winner will receive the chargeback sent from the bank. 

2. Some common cases of chargeback:

• The cardholder does not recognize the charge.
• The customer is not happy with the purchase, or the product was damaged.
• The customer could not receive the product he/she had paid for.
• The customer places an order several times by accident.
• The customer cancelled a subscription but still gets recurring charge.

2.1. Chargeback limits

There are chargeback limits set by Visa Europe and MasterCard International that businesses must not exceed.

• VISA – 0.9%
• MasterCard – 1%

These restrictions are determined based on purchases by credit card for each store. If a merchant’s chargeback volume exceeds these limits, their account is likely to be put under suspension or even termination. They can only avoid this if they manage to lower the chargeback.

2.2. How to prevent chargebacks:

• Provide detailed information about the goods and services you offer in your online shop. 
• Clarify the final total price (including shipping fees) at the checkout page.
• Be extremely thorough and straightforward about delivery time and fees.
• Allow customers to exchange an item/product or to claim a refund.
• Make it clear for all customers to be aware of the return and refund policies before/after purchases.
• Provide excellent customer service: make sure the hotline number, support email, contact us form are put at noticeable places on your dropshipping websites for easy contact and be understanding of your clients.
• Be responsive to the investigators when they require information.
• Use verified fraud prevention tools.