3 Best Ways to Prevent Chargebacks on Shopify

If you have an e-commerce Shopify store, you probably already know what a chargeback is. It happens when customers dispute a charge with their bank or issuer on their credit card bill. This can be for several reasons, but sometimes, it could be a fraudster trying to get their money back after making a fraudulent purchase; hence, you must take steps to prevent chargebacks on Shopify.

The best way to prevent chargebacks on Shopify is to use Shop Pay. Shop Pay is a fast and secure checkout option for customers that provides fraud protection for your store. If Shop Pay protects the order, you’ll receive a refund if it is charged back.

This article will give you a rundown of the steps you can take to minimize chargebacks and protect your store’s revenue. 

1. Use Shop Pay & activate Shopify Protect

Shop Pay is a feature that allows customers to save their payment and shipping information for faster checkout on your store. If you receive a fraudulent order or the customer disputes the charge, you’ll be protected by Shopify Protect.

Specifically, Shopify Protect uses algorithms and data analysis to flag potentially fraudulent orders and allows customers to report any suspicious activity on their accounts quickly. In addition, Shopify promises to cover any losses due to chargebacks on eligible orders processed through Shop Pay.

Here are a few examples of eligible orders:

• The order was processed through Shop Pay, and Shopify collected the customer’s payment information.
• The order was not marked as high-risk by Shopify Protect at the time of checkout.
• The chargeback was not for a digital product.
• The chargeback was for a physical product you shipped and didn’t require the customer to collect it from your physical store.

Here’s how to set up Shop Pay and activate Shopify Protect:

1. In your Shopify admin, go to Settings > Payments > Manage.

2. Under Shop Pay, check the box to enable it. This will automatically activate Shopify Protect as well.

Who is it available for?

Shopify Protect is still in early access, so it’s not available for everyone. You will need to try to activate it and see if they will enable it for you.

2. For digital product stores, use the Fileflare app

If you sell digital products like ebooks or courses, you can use Fileflare to prevent digital products being sent to your customers when high-risk fraud is detected on Shopify.

Fileflare allows you to set fraud protection on Medium and High-risk orders. Preventing your fraudulent customers from getting their digital products. No other digital download Shopify app has this feature!

In addition, Fileflare includes fraud protection by preventing copyright infringement. For instance, you can add a watermark to digital products like PDFs, which makes it easier to track and identify if they’re being illegally distributed.

Here’s how to install and set up Fileflare on your Shopify store:

1. Go to the Shopify App Store and install the Fileflare app.

2. In your Shopify admin, after installation, go to Apps > Fileflare

3. Upload your digital products and link them to their respective descriptions on your Products page.
4. Set limits on the number of downloads allowed for each product and added watermarks if necessary.

3. Use the Beacon app to void fraudulent orders

Beacon is an app that helps you detect and prevent fraud before it happens. Beacon will analyze the customer’s information, including their contact and address, when an order comes in to determine if it’s potentially fraudulent. It also considers their purchasing history and the product they’re trying to buy.

This is the best fraud protection app we’ve used on our client’s stores by far. It voids the order before it is paid, so you don’t need to pay refund fees.

If Beacon flags an order as potentially fraudulent, you can void it before payment is processed. This helps prevent chargebacks before they even happen and protect your store’s revenue. 

Here are the steps to install and set up Beacon on your Shopify store:

1. Go to the Shopify App Store and install the Beacon app.

2. In your Shopify admin, after installation, go to ‘Apps‘ > ‘Beacon.’ 
3. Set your fraud risk thresholds and choose the actions you want Beacon to take for flagged orders.

Learn more about how to use Beacon app.

Overview

These 3 ways to prevent chargebacks on Shopify are, in our eyes, the top 3 solutions for anyone experiencing trouble with their store in relation to the above. Chargebacks can be highly frustrating, and no one likes money or products potentially stolen from them.

Hopefully, with any of these 3 solutions, you’ll have a much better experience running your Shopify store with fewer chargebacks and issues concerning payments.