A close-up of a stack of credit cards.

How to Avoid Chargebacks and Credit Disputes

As a small business ourselves, we know how important it is to avoid disputes and (worse yet) chargebacks. Not only can you lose money, you can also take a hit to your reputation as a business. Fortunately, there are things you can do to avoid disputes, and then respond to disputes if necessary. We’ve taken an in depth look at what happens during a credit card dispute, and what you can do as a business when it happens to you.

What is a Dispute?

A credit card dispute occurs when the credit card holder disputes a transaction on their credit card statement. What this means for you as a business is that you need to respond to the dispute. The credit card issuer, which includes companies such as Amex, Mastercard, and Visa, then looks at the evidence and makes a decision whether to uphold or reject the dispute. If they decide to uphold the dispute, then  you may be liable not just for the original charge, but also any chargeback fees. Needless to say, this can put a dent in your profits as a merchant.

What to do During a Credit Dispute

A close-up of a stack of credit cards.

If you’re involved in a dispute, then the card issuer normally reaches out to the card member first. If this card member gives enough information upfront, then the card issuer will inform your merchant services provider and debit your account upfront. They will then reach out to your merchant services provider for further information if they can’t resolve the case. The provider will then ask you for any supporting documents they may need, and then do their best to resolve the issue. Make sure to send supporting documents as quickly as possible to resolve things quickly. You’ll also want to be sure to provide an explanation with the documents that you submit. You’ll want to include the steps you’ve taken to resolve the dispute, as well as any insight into the reason for the dispute. This not only provides clarity to your merchant services provider, but also the card issuer.

What Happens at the End of a Credit Dispute?

In the end, one of several things will occur. If your reply is sufficient and on time, then there won’t be a chargeback. If you don’t reply on time or with the right documentation, then your account will be debited. There’s also the possibility that you’re able to give sufficient, timely information and the card issuer will undo the chargeback. However, there’s also the possibility that if you don’t reply on time or with the right documentation, then the chargeback will stand.

How to Avoid Disputes

The fact of the matter is that the best way to avoid losing money with a chargeback is to avoid disputes in the first place. With that in mind, there are a few things you can do as a merchant to make it less likely that disputes will occur. One of the first things you can do is make sure that you provide a clear billing statement so that your customers can recognize your charges. Make sure that your business name appears accurately on card member statements by contacting your business services provider. You can also have your customer service phone number appear on the customer’s statement, so that your customer can call you directly.

You’ll also want to consider including a written cancellation, return, refund, and special terms policies at the time that your customers makes a purchase. Make sure to keep a record of your customer’s consent to payment, and a proof of delivery for orders that you’ve shipped. You’ll also want to make sure that you let your customer know of the expected delivery date. Finally, you should process and submit credits due as soon as possible, wait to submit charges until you ship any items, and also cancel recurring payments as soon as possible when a customers asks to discontinue services.


By following these key points, you can not only avoid disputes, but also have the documentation that you need in case there is one. Making sure that you submit items in a timely manner and catalogue as much as you can will put you on the path to success.

If you’re having trouble, you can also always reach out to your business services provider. If you’re looking for a business services provider, then reach out to us. We’re happy to help our clients through this process.