--- title: "Prevent Chargebacks Best Practices" slug: "prevent-chargebacks-best-practices" updated: 2026-01-02T21:14:28Z published: 2026-01-02T21:14:28Z stale: true --- > ## Documentation Index > Fetch the complete documentation index at: https://resource.payrix.com/llms.txt > Use this file to discover all available pages before exploring further. # Prevent Chargebacks Best Practices A chargeback is a credit or debit card charge that is forcibly reversed by an issuing bank. Chargebacks occur when a cardholder claims a transaction was the result of fraud or abuse. Even the most reputable online businesses can struggle with chargebacks. Chargebacks act as a shield for cardholders against criminals or dishonest business practices. For merchants, chargebacks can pose a serious threat to revenue and business sustainability. ## Authorization Procedures When attempting to process a transaction during the authorization stage, a decline code indicates that the card issuer does not approve the transaction. > [!WARNING] > **Important!** > > Authorizations should not be reattempted if a decline code is received. > > Do not attempt to reduce the transaction amount or repeat the authorization request. If a decline is received, return the card to the customer and ask for another form of payment. ## Card Not Present Transactions Card Not Present (CNP) transactions, including mail order/telephone order (MOTO), and online purchases, are more susceptible to chargebacks because in-person verification options are unavailable. Merchants can add controls to reduce the risk of chargebacks for fraudulent or unauthorized transactions: - Maintain a negative Database. - Limit the number of transactions by a single cardholder. - Use an address verification service (AVS). - Employ strategies that enable you to know your customers. - Publish a customer service phone number - Use CVV2/CVC2 security features. ## Credit and Refunds To prevent **Credit Not Processed** chargebacks, all customer refunds must be issued by merchants promptly. Merchants can take additional steps to reduce the likelihood of **Credit Not Processed**chargebacks: - Make customers aware of a cancellation or refund policy in writing. - Provide a “No Refund” policy on transaction receipts if store credit is only allowed. - Always provide refunds to the same card used in the original sale. - Never refund a card purchase with cash or check. ## Duplicate Transactions To avoid duplicate transactions that result in **Duplicate Processing** chargebacks, merchants should carefully review each transaction and settlement batch to try and spot duplicates. Merchants can take additional steps to reduce the likelihood of duplicate transactions: - Process one transaction at a time. - Balance deposits at the end of each business day. - Create separate, descriptive invoices for each purchase. - Check the batch totals at the end of every day to ensure that customers were not charged twice. - Immediately credit a cardholder’s account if the customer is charged twice in error. ## Merchandise or Service Not Received by Cardholder If a cardholder does not receive merchandise or services, a **Non-receipt of Merchandise** chargeback can occur. Goods and services must be delivered before charging the customer. Merchants can take steps to reduce the likelihood of merchandise or service not being received: - Create separate, descriptive invoices for each order. - Obtain a signed proof of delivery for any merchandise or service not fulfilled at the point of sale. ## Cardholder Disputes Quality of Merchandise or Service Shipped goods should be properly packed. The goods should be suitable for the purpose for which they were sold. All services fulfilled should be as described to the customer and of high quality. Merchants can take steps to reduce the likelihood of disputes over merchandise or service quality: - Make sure merchandise or service descriptions are accurate to what a customer receives. - Make customers aware of a clear return policy and method to return at the time of purchase. - Prominently display the return policy on the receipt and website. - Maintain and update each return policy regularly. - Obtain a signed proof of delivery for any merchandise or service not fulfilled at the point of sale. ## Manage Active Disputes Effectively managing active chargeback disputes is crucial for any business that accepts payments. This workflow also presents an opportunity to identify merchants' operational compliance issues and enhance the overall customer experience. The Payrix Pro platform provides a comprehensive solution for managing chargeback disputes. Users can monitor and respond to chargeback cycles and dispute statuses through the Disputes page of the Payrix Pro Portal or the Payrix Pro API. This allows acceptance of liability or contesting the dispute with supporting evidence. For more information on the chargeback handling process, see [Dispute Management](/v1/docs/dispute-management). A dispute initiated by a cardholder regarding the validity of a credit card charge. Chargebacks are usually initiated when the cardholder contacts the issuing bank, often due to an unauthorized charge, a dispute over goods, or other issue. This process results in a reversal of funds from the merchant's account by the card brand issuer, reimbursing the cardholder. To recover the funds, the merchant must provide supporting evidence to contest the chargeback. The movement of funds between a customer (cardholder or eCheck account holder) and a merchant to purchase a good or service. A transaction where a cardholder orders goods or services from a merchant by mail, telephone, or other means of telecommunications. Neither the card nor the cardholder is present at the merchant. The verification of a cardholder’s billing address in a transaction against the issuing bank’s address information for the cardholder. AVS is primarily used as a fraud prevention tool for eCommerce transactions. The final stage of batch processing, where transaction funds are successfully processed and deposited from the acquiring bank and its processor to the merchant’s Available Balance for withdrawal to their bank account. A group of captured transactions that are processed collectively by the acquiring bank for streamlined clearing and settlement of funds. A PayFac-as-a-service platform. Software companies can act as payment facilitators without taking on the associated risks, compliance burdens, and investment. A process where a customer questions a transaction with their issuing bank or credit card company. Disputes typically arise due to issues such as unauthorized charges, billing errors, or dissatisfaction with a product or service. They can be formal, initiated through the issuer during the preliminary chargeback proceeding, or informal, where concerns are raised directly with the merchant to seek resolution. The web portal offered by the Payrix Pro platform to accomplish tasks for their business through a web-based user interface rather than the API. The Payrix Pro portal contains general settings, payment processing options, reporting, fee settings, group assignments, user management, and much more.