Glossary · Chargeback
Payments
What is a chargeback?
A chargeback is a forced refund a cardholder's bank pulls back from a restaurant after a disputed or fraudulent charge — reversing the payment and usually adding a fee of about $15–$25, whether or not the restaurant was at fault.
In one line: a customer disputes a charge with their card issuer instead of asking you, and the bank yanks the money back out of your account — plus a fee. You lose the sale, the food, and the fee at once, and you have to actively fight to get any of it back.
Why it matters to a restaurant
A chargeback stings more than a normal refund because you lose on three fronts at once: the payment is reversed, the food (or the labor and packaging behind it) is already gone, and the processor tacks on a dispute fee even if you eventually win. For a low-ticket, high-volume business like a restaurant, a run of these quietly erodes margin — and if your chargeback rate climbs too high, processors can raise your rates or, in the worst case, threaten your ability to accept cards at all. It's a small line item that carries outsized downside.
The money angle
Chargebacks come in two flavors, and the fix differs. True fraud — a stolen card used on your online ordering — is best prevented with card-present chip/tap for in-person sales and address plus security-code checks online. "Friendly fraud" — a real customer who forgot the charge or disputes it instead of calling you — is prevented by being easy to reach and by showing a clear, recognizable name on the card statement. Card-not-present online orders carry more fraud risk to the merchant than in-person chip transactions, which is one more cost to weigh in your effective processing rate.
Fighting and preventing them
You can dispute a chargeback by submitting evidence — the receipt, order and delivery records, and any messages with the guest — through your processor before the deadline. But defense is expensive; prevention is cheaper. Keep clean records, use chip or tap in person, verify card details online, and resolve complaints directly and quickly, so a frustrated guest asks you for a refund rather than their bank. The best chargeback is the one that never gets filed.
Frequently asked questions
What is the difference between a chargeback and a refund?
A refund is something you choose to give a guest directly. A chargeback is forced: the customer disputes the charge with their card issuer, and the bank reverses the payment out of your account, often adding a fee. You lose the sale either way, but with a chargeback you also lose control and usually pay extra.
How do restaurants prevent chargebacks?
Use a clear, recognizable name on card statements, keep receipts and order records, resolve guest complaints directly before they go to the bank, and take card-present payments with a chip or tap when you can. For online orders, address verification and requiring the security code help cut fraud-based disputes.
Can a restaurant fight a chargeback?
Yes. You can dispute it by submitting evidence — the signed or card-present receipt, order details, delivery confirmation and any customer communication — through your processor within the deadline. Winning is easier for in-person chip transactions than for card-not-present online orders, where the merchant carries more of the fraud risk.