Merchants on Shopify are seeing growth, but they’re also seeing growth in chargebacks, cutting into their revenue. Shopify merchants are facing a new kind of challenge that has nothing to do with products, marketing, or logistics. The truth is, it’s chargebacks. The rate of chargebacks has gotten out of control over the past year, cutting into profits and overwhelming support teams.
According to recent Mastercard and Datos Insights research, chargebacks are expected to rise by 24% between 2025 and 2028, growing from 261 million forecasted disputes to 324 million. That growth is fueled by the expansion of digital and card-not-present (CNP) transactions, which now make up 63% of all merchant transactions.
As online commerce grows, so does the opportunity for errors, misunderstandings, and outright fraud. Unfortunately, Shopify merchants are feeling the brunt of it.
The Rising Cost of Chargebacks
Every chargeback is another tax on your growth, and every year that tax increases.
The rise in chargebacks isn’t just an administrative hassle; it’s a financial crisis merchants are watching in slow motion. Those same stats from Mastercard say that the average chargeback in the U.S. is valued at $110, but the real cost is far higher once you factor in lost merchandise, transaction fees, and wasted time.
Even legitimate businesses are feeling squeezed as 73.6% of disputes eventually become chargebacks, meaning that nearly three-quarters of all contested transactions end with the merchant losing money.
So why are these numbers climbing so fast?
Explosion of CNP transactions
As more customers shop digitally, there’s less verification and more room for disputes.
Subscription-based models
Recurring billing often leads to confusion or forgotten charges that result in chargebacks.
First-party fraud
Also known as “friendly fraud,” where real customers falsely claim they didn’t make a purchase.
That’s a drain that can kill revenue streams, unless you can actually fix the drain, but that’s no simple fix.
In many cases, merchants never even get the chance to defend themselves. They get a notification about a complaint, and that’s enough for the bank to send their cash back to a consumer who could be mistaken or outright lying. Shopify store owners often have a limited window to provide evidence, and many lack the tools or bandwidth to respond before the deadline passes.
Which Chargebacks Hurt The Most?
Most banks don’t care why you lost that cash, but the actual merchants certainly do. To financial institutions and some payment processors, those chargeback losses are just a statistic. A drop in a bucket that will always have thousands of drops in it, but that’s not how merchants think. Chargebacks aren’t just a hit to their revenue; they can be a hit to their reputation, and each one is unique.
Not all chargebacks are created equal. Some are the cost of doing business; others can cripple a small merchant overnight. Understanding the types and how much damage they can cause is key to prevention.
First-party fraud
The most common and hardest to fight. This occurs when customers claim they didn’t make a purchase or didn’t receive what they ordered. It’s often intentional — and devastatingly hard to disprove.
Third-party fraud
This is true fraud, where stolen cards are used. It’s bad, but at least easier to prove and contest.
Non-fraud disputes
These result from legitimate misunderstandings, poor communication, or unclear billing descriptors.
Low-dollar write-offs
Small-value disputes that merchants don’t contest because they cost more to fight than to lose.
Many banks and payment processors lump all these categories together, making it difficult for merchants to understand the source of their risk. Shopify’s own system has been criticized for its lack of visibility into chargeback reasons, and that’s an issue that Spotify themselves have addressed on this Reddit post asking for feedback.
Preventing Chargebacks Before You Have to Fight Them
Preventing chargebacks is simpler and smarter than trying to recover from them. An increase in fraud, refunds, and chargebacks is a growing pain. The larger your business gets, the more you’re exposed to genuine misunderstandings or consumers looking to get free product.
It comes with the territory as that territory grows, but that doesn’t mean every merchant has to sit and take it. While merchants can’t eliminate chargebacks, there are practical ways to minimize their impact.
Simple strategies include:
Clarify billing descriptors
Customers should immediately recognize your business name on their statement.
Audit delivery times and expectations
Make sure your stated shipping times match reality.
Maintain an exception budget
Set aside a small reserve to handle refund or dispute spikes.
Review policies regularly
As you scale, your risk exposure changes. Update refund and delivery terms often.
And most importantly, choose a proactive payment partner, not reactive.
A partner who doesn’t just process transactions, but actively helps you prevent chargebacks through education, data, and responsive support.
Why? Because you need real prevention and real support to get real results.
A Partner Should Help You Win Before You Lose
We fight merchant chargebacks like they’re our own, because they’re our own.
Most chargeback “guides” for Shopify are content farms chasing keywords, not real support. While we’ve already written a guide on how to reduce chargebacks, our merchants deserve more than just blog posts. They need coaching and proactive protection.
That’s where Luqra comes in. Unlike reactive payment platforms, Luqra utilizes chargeback management tools that can prevent and identify chargebacks before they happen. Our approach combines real-time data insights with U.S.-based, in-house support available 24/7.
We don’t just process payments; we help merchants protect their revenue through hands-on coaching, real-time fraud detection, and clear communication that keeps you one step ahead of disputes. When you have a problem, we treat it like our own.Our philosophy is simple: You shouldn’t lose money on a legitimate sale.
Let’s talk about how we help you keep chargebacks down, so you can keep more of your revenue.
