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, 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.
So 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.
To offset the cost they incur, banks decided to introduce chargeback fees. So, in a nutshell, a chargeback fee is the penalty banks imposed on merchants to recoup incurred costs while handling consumer chargebacks and disputes associated with your account.
Also, card networks apply this fee to help protect cardholders and discourage dishonest or fraudulent business practices that could lead to chargebacks.
How much is Shopify’s 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, 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: Circumvent chargeback fees with early dispute settlement.
I know you know the common causes of Shopify chargebacks. Such as when a product is not as described, an order was not delivered, some make 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.
But suppose you know when the cardholder made the first step in seeking remediation by filling a Shopify dispute. In that case, you can do all you can to make things right. Or you can be better prepared to hit them back with all the compelling evidence in the world.
But 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 many bargaining chips -- and sometimes, that causes unwinnable chargebacks.
With a chargeback alert solution, you can readily get just-in-time notification on chargebacks and 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 in 24 hours. If the merchant refunds the transaction in those 24 hours, he/she will not get a Chargeback. And by extension, they will not pay any Shopify chargeback fee.
It’s wise because you also get to save time and financial resources, 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.
By the way, you should also know that if you automate your disputes with 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.
Shopify refunds merchants any chargeback fee they paid on chargebacks resolved in their favor unlike some other processors.
And this is genius because if you do your homework and integrate fully automated chargeback tools such as Chargeflow, you can say goodbye to Shopify chargeback fees.
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, and offer 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 put screws on the dispute. You fight back with every documentation on that order and recover your financial losses.
That’s how you limit your financial exposure due to Shopify chargeback fees.
If you’re rather 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 should know that with Chargeflow, you can take your chargeback win rate to at least 75%.