What is Chargeback? How to Avoid Chargeback As International Sellers

If you sell online, you’ve probably heard of a chargeback, that dreaded moment when a payment you thought was secure gets pulled back out of your account. For international sellers, the sting can be even sharper. You’re not only losing a sale; you may also lose the product, pay extra fees, and spend hours dealing with paperwork across time zones.

In this guide, we’ll break down what is chargeback, the main types, how the process works, why it’s especially challenging for international sellers, and practical steps on how to avoid chargeback so you can protect your business.

What is Chargeback?

A chargeback is when a customer disputes a transaction with their bank or card issuer and the payment is reversed. Unlike a refund, which you as the seller approve, a chargeback is initiated by the buyer through their bank, often without giving you a chance to fix the problem first.

Banks and card networks like Visa or Mastercard handle the process. If the dispute is accepted, the money is taken from your merchant account and returned to the buyer, often along with a chargeback fee you must pay.

Types of Chargeback

Chargebacks generally fall into three categories:

Merchant Error Chargeback

This happens when the seller makes a mistake, such as shipping the wrong item, providing misleading product information, charging the wrong amount, or failing to deliver on time. These are the easiest to prevent because they are fully under the seller’s control.

Chargeback Fraud (True Fraud)

In these cases, stolen payment information is used to make a purchase without the real cardholder’s consent. The buyer is a victim of fraud, and while the seller is not at fault, they often still lose the money and the goods.

Friendly Fraud Chargeback

This is when a buyer disputes a valid transaction, because maybe they forgot they made the purchase, didn’t recognize the seller’s name on the statement, or simply regretted the purchase and chose this route instead of asking for a refund.

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Chargeback Process — How Does It Work?

While rules vary slightly by payment network, the basic flow of chargeback is similar:

1. Cardholder Disputes the Charge: The buyer contacts their bank to claim the transaction was unauthorized or unsatisfactory, usually within 120-180 days after purchase.

2. Issuing Bank Reviews: The bank checks the claim and may issue a provisional credit to the buyer.

3. Seller is Notified: You receive a notice with the dispute reason and a request for evidence from the acquiring bank.

4. Evidence Submission: If you would like to dispute the chargeback, you can send shipping records, product descriptions, proof of delivery, and communication logs within a few days or weeks depending on the bank’s policy.

5. Final Decision: The issuing bank decides based on the evidence. If you won the case, the chargeback is reversed and funds are transferred back to your account. However, if you lose, the funds are permanently taken from you.

The entire process can last 75-120 days, but for cross-border transactions, it can take longer due to bank coordination and different time zones. 

Disadvantages of Chargebacks for Sellers

• Loss of Revenue and Goods – You lose both the payment and the product if already shipped.

• Extra Fees – Banks often add a chargeback fee ranging from $5-100 for each dispute.

• Higher Processing Rates – A high chargeback ratio can lead to increased payment processing costs.

• Damaged Reputation & Account Termination Risk – High chargeback rates can hurt your standing with payment processors and may lead to account termination.

• Operational Disruption – Time spent disputing chargebacks takes away from running your business.

Why Resolving Chargebacks is Hard for International Sellers

If you sell across borders, chargebacks can be more than just a routine headache — they can turn into a long, costly process. Here’s why:

• Time Zone Differences: You might get a chargeback notification during your off-hours, meaning your response is delayed. Since most card networks set strict deadlines for evidence submission, even a small delay can cause you to lose the dispute.

• Language Barriers: If the dispute involves a customer or bank in a country with a different language, you may need to translate your invoices, product descriptions, or customer communication. This takes extra time and can cause misunderstandings if translations are unclear.

• Different Rules and Evidence Standards: Each card network (Visa, Mastercard) and each market has its own rules on what counts as valid evidence. For example, one bank might accept a shipping tracking page in English, while another may require localized documentation or a signed proof of delivery.

• Limited Fraud Prevention Tools: Some countries don’t support advanced tools like Address Verification Service (AVS) or 3D Secure. Without these, it’s harder to verify a buyer’s identity and prevent fraudulent transactions.

• Currency and Payment Method Issues: Cross-border transactions sometimes involve currency conversions or local payment methods. This can confuse customers when the amount on their bank statement doesn’t match what they expected, leading to disputes.

How to Avoid Chargebacks as International Sellers

Improve Product and Service Accuracy

Misleading details often lead to disputes. Use clear and truthful descriptions, supported by high-quality images. When possible, add precise specifications such as size, weight, and materials. This helps set realistic expectations and reduces the chance of misunderstandings.

Strengthen Payment Security

Fraud prevention tools are your first line of defense:

• Enable Address Verification Service (AVS) and CVV checks.

• Use 3D Secure authentication like Verified by Visa or MasterCard SecureCode for an extra verification step of the buyer’s identity.

• Watch for unusual behavior, like mismatched billing and shipping addresses.

Provide Transparent Shipping Information

International shipping comes with potential delays. Give buyers realistic timelines, share tracking numbers promptly, and send quick updates if customs or weather issues arise. Even small updates can reassure customers and reduce the urge to file a chargeback.

Maintain Strong Customer Communication

When customers can reach you easily, they’re more likely to resolve problems directly. Reply promptly to messages, aim to address issues within 24 hours, and offer refunds or replacements when appropriate. A fair and quick resolution can keep disputes from escalating.

Keep Comprehensive Transaction Records

Organized records make defending a case much easier. Keep:

• Copies of receipts and invoices

• Proof of delivery and shipping documents

• Communication history with the customer

Conclusion

Understanding what is chargeback is the first step to protecting your sales. By identifying the main types, knowing how the process works, and applying clear prevention strategies, you can reduce disputes and keep more of your hard-earned revenue.

The sooner you make chargeback prevention part of your selling strategy, the fewer headaches you’ll face, and the more time you’ll have to focus on growing your business globally.