Chargebacks affect merchants that accept credit cards in nearly every industry, including building and design professionals. These disputes exist to protect consumers from fraudulent and incorrect billing, but they can quickly become costly and time-consuming for businesses that are unprepared to respond.
Winning a chargeback often comes down to acting quickly, typically within 7-10 days, and submitting compelling evidence that clearly addresses the bank’s reason for the dispute. In this guide, we’ll explain how chargebacks work, what merchants need to know to successfully dispute them, and how having 8am™ ClientPay on your side can significantly improve your chances of winning.
What is a chargeback?
A chargeback occurs when a credit card or debit card user disputes a transaction directly with their issuing bank rather than requesting a refund from the merchant. In response, the bank temporarily reverses the transaction while it investigates the claim.
Chargebacks in the U.S. date back to 1968, when the Truth in Lending Act was enacted to protect consumers from unfair or inaccurate billing practices. While chargebacks serve an important consumer protection role, they place the burden of proof squarely on merchants during the dispute process.
Types of chargebacks and common reasons they're initiated
Chargebacks generally fall into two categories: fraudulent and non-fraudulent.
Fraudulent chargebacks include both true fraud and friendly fraud. True fraud occurs when a customer’s payment information is stolen and used without their authorization. In these cases, the cardholder typically has no prior relationship with the merchant.
Non-fraudulent chargebacks often stem from misunderstandings or dissatisfaction. A customer may believe a product or service was defective, not delivered as expected, or billed incorrectly. In some cases, confusion arises when multiple people share a credit card account, and one cardholder doesn’t recognize the charge.
Not all illegitimate chargebacks are malicious. Immediately assuming bad intent can damage your reputation and customer relationships. However, when a customer files a chargeback despite receiving the product or service as agreed, you may be dealing with friendly fraud.
Friendly fraud occurs when a customer disputes a legitimate charge with their bank instead of contacting the merchant directly. Because banks typically lack context beyond the transaction itself, the dispute often becomes the customer’s word against the merchant’s—making documentation critical.
What's essential for you to know about chargebacks
Are there fees for chargebacks?
When a business is unable to successfully dispute a chargeback, it must return the transaction amount to the customer and typically still pays a chargeback fee. These fees are charged by your acquiring bank or payment processor to cover the administrative cost of handling the dispute and are usually non-refundable even if you win. In 2025–2026, chargeback fees in the U.S. generally range from about $20 to $100 or more per dispute, depending on your processor, industry, and risk profile.
Excessive chargebacks can also cause payment processors or banks to classify your business as high risk, leading to higher processing costs and stricter account terms. A high-risk designation often results in:
Higher per-transaction processing fees compared with standard merchant accounts; processors may charge more for high-risk accounts to offset the additional exposure they take on.
Increased oversight, rolling reserves, and rate adjustments by banks to protect themselves against potential losses.
NerdWallet notes that high-risk merchant accounts typically come with higher overall costs, including higher per-transaction fees and chargeback penalties, than standard small-business accounts, which may offer lower base processing rates.
How many chargebacks can merchants have?
There isn’t a single universal chargeback rate that defines when a merchant is labeled high risk, because card networks and processors use different formulas and thresholds to assess dispute activity.
However, Visa and Mastercard both closely monitor chargeback ratios—the number of chargebacks relative to total transactions—and will flag risk when those ratios rise. Visa divides a month’s chargebacks by that same month’s sales, while Mastercard divides a month’s chargebacks by the prior month’s sales volume, meaning each network can show a different ratio for the same merchant activity.
There isn’t a single network-wide “acceptable” ratio, but industry practice and many processor guidelines suggest keeping your chargeback rate well below about 1% of monthly transactions to avoid monitoring programs or penalties.
Visa often places merchants under closer scrutiny when their chargeback ratio reaches 0.9% with 100 or more disputes in a month, while Mastercard’s Excessive Chargeback Merchant program may activate at a rate of 1.5% or higher with 100+ chargebacks in the same month.
Because each network only counts disputes on its own cards and uses its own formulas, merchants can be compliant on one network but flagged on another, which is why staying below 1% chargebacks overall is a common benchmark for risk management.
Reason codes
Every chargeback includes a reason code that explains why the customer initiated the dispute. Reason codes vary by card network, but they typically fall into categories such as fraud, authorization issues, or non-receipt of goods or services.
Understanding the reason code is essential. The evidence required to win a dispute depends entirely on addressing that specific claim. Submitting insufficient documentation—or failing to submit evidence at all—significantly reduces your chances of retaining the disputed funds.
What evidence helps win a chargeback?
Winning a chargeback dispute depends on submitting compelling evidence that directly addresses the dispute’s reason code. Banks don’t investigate on your behalf—they review only the documentation you provide and decide which side presents a clearer, better-supported case.
Strong evidence often includes signed authorization forms or contracts, which show the customer approved the charge. Invoices and signed receipts help confirm what was purchased, when the transaction occurred, and the agreed-upon amount. Communication records, such as emails or text messages, can demonstrate whether the customer understood the transaction, received updates, or raised no concerns before filing the dispute.
Proof of delivery or service completion—including delivery confirmations, timestamps, or signed work approvals—is especially important for disputes claiming services were not rendered. Transaction data from your payment processor, such as the customer’s payment method details and IP address, can further support your case.
All evidence should be organized and submitted with a clear rebuttal letter explaining why the chargeback is invalid and how your documentation supports your position.
Questions to ask yourself before handling a chargeback dispute
Can a chargeback be resolved directly with the customer?
Chargebacks can happen for many reasons, and not all disputes are hostile or fraudulent. When you receive a chargeback notification, it’s worth evaluating whether the issue could be resolved through direct communication, especially if the claim appears legitimate or stems from confusion rather than bad intent.
That said, do not issue a refund unless the customer confirms they will withdraw the chargeback. Once a dispute is filed, refunding the transaction without cancellation can leave you with both a lost sale and a chargeback fee.
In some cases, a prompt, professional response can reassure the customer and prevent the dispute from escalating. However, customers often turn to their bank when they believe the issue won’t be resolved quickly through the merchant.
Am I at fault?
Before contesting a chargeback, honestly assess whether your business made a mistake. If the product or service wasn’t delivered as agreed, was billed incorrectly, or failed to meet stated terms, issuing a refund may be the most appropriate path.
Resolving valid disputes quickly can prevent unnecessary chargeback losses, protect your reputation, and preserve customer trust. Not every chargeback is worth fighting—especially when accountability and transparency can lead to a better long-term outcome for your business.
How to win a chargeback without hurting your reputation
Fighting the chargeback process with ClientPay
When you use ClientPay, your business is supported by dedicated risk and fraud analysts who help guide you through every stage of the chargeback process. Instead of navigating disputes alone, you have experienced professionals working to reduce liability and improve your chances of success.
At no additional cost, the ClientPay team helps by:
Notifying you as soon as a chargeback is filed and providing detailed transaction information to identify the issue
Requesting and reviewing supporting documentation to assess the validity of the dispute and your likelihood of winning
Submitting all required evidence to the merchant services departments at the major U.S. card networks
Providing ongoing status updates and answering questions related to PCI compliance, card network rules, and dispute requirements
As a result, ClientPay maintains a 67% chargeback win rate for building and design professionals who respond promptly to chargeback notices—far exceeding typical industry averages.
How to proactively protect your business from a chargeback
Authorization form
Clear, written authorization is one of the most important safeguards against chargebacks. Using a credit card authorization form helps document a client’s consent to charge their card and can also be used when a third party is paying on a client’s behalf. Having this approval in writing ties the cardholder directly to the transaction.
Signed authorization forms also make it easier to schedule future payments or process recurring charges with confidence. Collecting these forms during your intake process creates a reliable paper trail showing the cardholder approved the charge in advance. If a dispute arises later, documented authorization can serve as strong evidence in your chargeback response.
Proper documentation and record keeping
Maintaining accurate records and detailed transaction documentation is essential not only for healthy business operations but also for successfully disputing chargebacks. When a dispute occurs, merchants must respond quickly and provide clear evidence that the goods or services were delivered as agreed.
Relevant documentation may include invoices, contracts, proof of service completion, and communication records such as emails or text messages. Access to complete transaction data—timestamps, payment method details, and customer information—can further strengthen your case. ClientPay provides convenient access to transaction records and reporting tools so you can retrieve the documentation you need without delay.
It’s also important to ensure your business name is easily recognizable on credit card statements. Customers sometimes file chargebacks simply because they don’t recognize the charge. If your legal business name differs from your brand name, work with your payment processor to update your billing descriptor so it reflects what clients expect to see.
Accepting credit cards is important to your business, despite chargeback risks
Chargebacks can be frustrating. Even when you’ve done everything right, disputes can happen. But stepping away from credit card payments isn’t the answer. Today’s clients expect flexible, convenient payment options, and accepting cards remains one of the most efficient ways to get paid promptly and reliably.
The key to managing your risk is using a payment solution designed to support your business when disputes arise.
Unlike generic processors, ClientPay understands the unique billing structures and client relationships common in the AEC industry. With both preventive tools and hands-on chargeback support, you’re not left navigating disputes on your own. You gain access to expert guidance, organized transaction records, and a system built to protect your revenue.
If you’re ready for a payment solution that helps you accept credit cards with confidence, schedule a demo of ClientPay today.