# What is Chargeback?

What is Chargeback? A customer disputing a charge through their bank. Costs the merchant: a $7-15 fee plus the lost amount. Above 1% puts the account at risk.

## How it works in practice

One chargeback costs 2-3x the original sale. Above 2%, the account can be terminated.

## Related metrics

- Friendly Fraud — a common cause
- Payment Gateway — manages the process
- Dispute Resolution — a defense
- Fraud Prevention — prevention

## Common misconception

'The customer is always right in a chargeback.' You can dispute it. Proof of delivery, correspondence, and a pre-shipping photo all serve as protection.

## How to fix it

High chargeback rate? (1) improve product descriptions, (2) tracking for every order, (3) easy returns, (4) 3D Secure.

## Real-world example

An electronics store: a 2.3% chargeback rate. 60% came from 3 products with inaccurate descriptions. Updating them plus a checkbox brought it down to 0.8% within 3 months.

## Where to start

Track the monthly chargeback rate. Above 0.5%, investigate immediately.

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Category: Payments · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/chargeback