I have worked in the payment industry for almost 20 years and started out as a fraud investigator, so here is my best practices to avoid chargebacks. Chargebacks is and will always be a hassle. They impact your turnover and in worst case they can ruin your business. The very first step in reducing chargebacks is determining the actual chargeback reason. The different types: Criminal Fraud: This is known as credit card fraud. Criminals gain access to card details and make unauthorized transactions. Merchant Error: This is often caused by processing errors, faulty business practices, unchecked policies. There are several scenarios where merchant missteps that can cause chargebacks. Friendly Fraud: This is known as chargeback fraud, this type of chargeback is often due to lack of knowledge or understanding from the consumer. The difference between chargeback and refund It’s very simple, if the consumer contact the card issuing bank and request the bank to reverse the transaction from the merchants bank – it’s a chargeback. If the customer contact the merchant and the merchant returns the money to the customer – it’s a refund. Avoiding chargeback completely is almost impossible, but if you follow our best practices you have done what’s in your power to prevent it.