Use This Loophole to Avoid Paying Shopify Chargeback Fees in 2024 and Beyond

As an e-commerce merchant, you have so much work on your hands.

Operating your business, maintaining an excellent digital presence, and making sure that leads convert to actual sales -- all of these things take time and cost you money.

So, if you find a window of opportunity to keep extra bucks that you’d otherwise flush down the Shopify dispute mitigation pipe, would you instead not take it?

Of course, you would!

You’ll not just seize the moment. Instead, you’ll construct your Shopify dispute mediation processes to ensure you don’t have to spend another dime in dispute fees.

Like, EVER. Right?

In this article, we’ll give you insider secrets to help you stop Shopify chargeback fees from burning a hole in your pocket. The beautiful thing is that you can do that without getting into any trouble with Shopify.

But first, let's cover the basics.

Why Does Shopify Take Chargeback Fees from Merchants?

It seems unfair that anytime you get a chargeback, you also have to pay a non-negotiable fee. But why is that; why do you have to bear the double brunt of lost revenue and extra out-of-pocket payment for a Shopify dispute?

Well, for starters, it’s how the system works.

After U.S lawmakers established chargebacks as a consumer protection tool in 1974, cardholders are empowered to seek remediation for any transaction issue from their banks.

However, that process often takes so much time and requires several hours of work. Hence, banks introduced chargeback fees to offset the administrative cost they incur.

So, in a nutshell, a chargeback fee is the penalty banks impose on merchants for helping to handle consumer chargebacks and disputes associated with your account. Furthermore, card networks allow this fee to help protect cardholders and discourage dishonest or fraudulent business practices that could lead to chargebacks.

How Much is Shopify Chargeback Fee?

The answer to that question depends on your country or region. Chargeback fees are usually in the neighborhood of 15 to 40% of the transaction value. And these days, with the uptick in the number of chargebacks filed, chargeback fees have become a significant burden to merchants. Below is a quick overview of Shopify chargeback fees by country:

• 25 AUD in Australia
• 15 CAD in Canada
• 15 EUR in Austria, Denmark, Germany, Italy, the Netherlands, Belgium, and Spain
• 15 EUR + 23% VAT in Ireland
• 85 HKD in Hong Kong SAR
• 1,300 JPY in Japan
• 20 NZD in New Zealand
• 15 SGD in Singapore
• 15 EUR or 150 SEK in Sweden, based on payout currency
• 10 GBP in the United Kingdom
• 15 USD in the United States

In general, a chargeback fee might cost you anything from $20 to $100, depending on your acquiring bank. When you do proper math on these incriminating charges, you'll realize that merchants spend an average of $200 for every $100 transaction that results in a chargeback.

So overlooking Shopify chargeback fees isn’t the intelligent thing to do. Lesser expenses have a way of suddenly building up to significant losses.

How to Avoid Paying Shopify Chargeback Fees Legally

For some processors, regardless of the dispute outcome, you must pay a chargeback fee. But Shopify has practical chargeback mitigation protocols you can leverage to avoid paying chargeback fees.

Here’s how it works:

Option 1: Avoid Chargeback Fees with Early Dispute Settlement

I know you know the common causes of Shopify chargebacks. Standard chargeback reasons include:

• When a product is not as described,
• An order was not delivered,
• Someone makes an unauthorized transaction, or a cardholder receives double billing or billing for a canceled recurring payment,
• A cardholder does not recognize a particular deduction, and
• The good ol’ buyer's remorse.

Most merchants know of cardholder disputes after the fact. That leaves them little time to do any tangible remediation work. But suppose you know about the chargeback BEFORE they became a chargeback. In that case, you can everything in your power to make things right. Or you can be better prepared to hit them back with all the compelling evidence in the world.

Right?

If you don’t know when they make a move, you’ll just be reacting to strings they pulled. As a result, you will not have much bargaining chips -- and sometimes, that causes unwinnable chargebacks.

With a chargeback alert solution, you can readily get just-in-time notification on the disputes. In that sense, a chargeback alert solution is a service that, if a merchant signs up for, will send an alert of an incoming chargeback within 24 hours. If the merchant refunds the transaction within the said period, he/she will not get a chargeback. And by extension, they will not pay any Shopify chargeback fee.

That's smart because you also get to save time and financial resources that you'd otherwise spend in the lengthy chargeback process. And it's a non-negotiable solution for your business if you are in an industry that’s prone to disputes -- like the SAAS industry.

By the way, you should also know that you get chargeback alert and all the benefits we've discussed when you onboard Chargeflow. You'll get loads of data to intuit transactions that'll likely result in a Shopify chargeback.

Option 2: Win Shopify Chargebacks and Have Shopify Refund any Chargeback Fee

Unlike most platforms, Shopify refunds merchants any chargeback fee they paid on chargebacks resolved in their favor.

So you've got to do your homework.

For starters, you want to ensure you obtained adequate authorization for each transaction. You also want to ensure your refund/return policy documents are well-drafted and easy to find. And you should also make sure your billing descriptors easy for the cardholder to understand, deliver order insured, tracked, timely, and to the correct address, while offering helpful customer service to your clientele.

With that, when push comes to shove, and you know you’ve kept your end of the bargain. You can then put screws on the fraudster and fight back with every documentation on that order and recover your financial losses. But you know the genius thing? Integrateing a fully automated chargeback solution like Chargeflow means you can say goodbye to Shopify chargeback fees.

Summing Up

Chargebacks are non-negotiable in today's e-commerce. But paying Shopify chargeback fees is optional if you apply the hacks we've shared with here. Avoid chargeback fees by resolving disputes before they turn into full-blown chargebacks or have Shopify refund your chargeback fee by winning cases on autopilot with Chargeflow.

That’s how you limit your financial losses exposure due to Shopify chargeback fees.

If you’re rather be eating these expenses in the guise that they’re a cost of doing business and there’s nothing you can do about it, then you now know better. With Chargeflow, you can take your chargeback win rate to at least 75%. Start here.