Chargebacks and disputes

This article aims to help you better understand how chargebacks work, your obligations, and the best practices to implement in order to limit their impact.

🔍 What is a chargeback?

A chargeback, also known as a payment reversal, is a mechanism designed to protect consumers in cases of fraud or disputes, while strengthening trust in online payments. However, it also represents a significant financial risk for merchants.

A chargeback refers to the dispute of a card payment initiated by a customer with their bank in order to obtain a refund for a transaction.

Unlike a standard refund initiated by the merchant, a chargeback is triggered by the customer’s bank, without the seller’s prior consent.

💸 What are the financial impacts of a chargeback?

• Immediate transaction debit
  Upon receipt of a chargeback, the transaction amount is debited from your payment wallet. If the balance is insufficient, the SC wallet will be debited, regardless of the outcome of the dispute.
• Funding of the SC wallet
  Your SC wallet must always be sufficiently funded. Otherwise, our teams will contact you to request a top-up.
• Processing fees
  Fees apply systematically, whether the chargeback is disputed or not, and whether it is won or lost.
• Monitoring by card schemes
  A high chargeback ratio may result in increased monitoring and indicate a fraud risk.
• Possible penalties
  Exceeding authorized thresholds may result in significant financial penalties, including a ban on processing card payments (Visa, Mastercard, CB, etc.).

✅ Prevention remains the most effective approach: a chargeback avoided is always preferable to a chargeback disputed.

⚖️ When is it appropriate to dispute a chargeback?

Before initiating a dispute, it is recommended to assess your chances of success.

✅ Disputing is relevant when:

• The transaction was successfully authenticated via 3D Secure
• The service was provided in accordance with the terms and conditions
• You have proof of effective use (logs, access, participation, etc.)
• You have signed proof of delivery or a tracking number

❌ It is preferable not to dispute when:

• The transaction involves unauthenticated card fraud (no SCA)
• The service was not provided
• Your terms and conditions do not cover the claimed dispute

⚠️ Disputing without a solid case requires time and resources with little chance of success.

🔐 What is the role of 3D Secure?

3D Secure (3DS) is a strong customer authentication protocol recognized by Visa, Mastercard and the CB network.

• Authenticated transaction: liability in case of fraud is transferred to the issuing bank.
• Unauthenticated transaction: financial liability remains with the acquirer (and contractually with the partner).

📄 Which documents are required to dispute a chargeback?

The quality and completeness of the case file are key to maximizing your chances of success.

Mandatory documents:

• Description of the facts (2 to 3 sentences)
• Invoice or order confirmation
• Service or rental agreement
• Terms and conditions applicable on the transaction date
• Proof of acceptance of the T&Cs (timestamp, IP address, customer journey)
• Proof of delivery or service usage
• Proof of 3D Secure authentication, if applicable
• Customer communications (emails, messages, complaints)

Additional useful elements:

• Customer IP address
• Phone number
• Internal customer ID

⚠️ Any incomplete case file may be rejected without further review in order to comply with card scheme deadlines.

⏳ What are the dispute deadlines?

You have a maximum of 8 business days from the chargeback date to send us your complete documentation.

After this deadline, the dispute can no longer be processed, even if it is justified.

✅ Recommendation: start collecting your evidence as soon as you receive the chargeback notification.

🛡️ How can you reduce the risk of chargebacks?

• Use a clear and recognizable bank descriptor. A significant share of disputes results from cardholders not recognizing the merchant name on their statement. A clear and identifiable descriptor significantly reduces this risk.
• Display a clear payment and refund policy: the billing method (one-off payment, recurring subscription, installments, etc.) and refund conditions must be visible and understandable before purchase.
• Set up a responsive and accessible customer support service

• Draft precise and easily accessible terms and conditions

   

🧪 Practical examples

🔴 Case 1 – Fraud on an unauthenticated transaction

A cardholder disputes a transaction for fraud. The transaction was not subject to strong authentication (3D Secure missing or not completed).

In this case, no liability shift to the issuing bank can occur. As the acquirer, Lemonway bears the chargeback, which is then passed on to your account in accordance with contractual terms. 

Fraud-based representment will systematically be rejected by card schemes due to the absence of authentication evidence. 

How can this be avoided? By submitting your transactions to the 3D Secure protocol, you enable the issuing bank to authenticate the cardholder. If successful, liability for fraud is transferred to the issuer — this is the protection mechanism for merchants.

🟢 Case 2 – Fraud on a transaction authenticated via 3D Secure

A cardholder disputes a transaction for fraud, but the transaction was successfully authenticated via 3D Secure by the issuing bank.

When authentication is successful, liability is transferred to the issuing bank. Lemonway can then dispute the chargeback on your behalf.

Warning: this protection does not apply in all cases, particularly for recurring transactions (MIT) or incomplete authentication.

Please provide us with the authentication data within the required timeframe so that we can take action.

🟠 Case 3 – Commercial dispute (goods or service not received)

A cardholder disputes a transaction claiming they did not receive the goods or services ordered.

3D Secure does not cover delivery or service-related disputes. You must demonstrate proper contractual performance. A signed delivery receipt is not mandatory but remains the strongest evidence. For digital services, access logs, usage confirmations or emails are also acceptable.

How can this be avoided? By systematically documenting deliveries and providing accessible customer support: a complaint handled upstream is a chargeback avoided.

🏦 Lemonway’s role in the process

Lemonway acts as a licensed payment institution. As such:

• We receive chargeback notifications
• We inform you accordingly
• We forward your evidence to partner banks and card schemes
• We strictly comply with regulatory deadlines

⚠️ Lemonway can never refuse a chargeback. The final decision lies exclusively with the cardholder’s issuing bank and the card schemes.

Lemonway cannot, under any circumstances, guarantee the outcome of a dispute procedure.