What is Chargeback protection?
Chargeback protection is an opt-in risk management product to manage financial risks after chargebacks have already occurred. Chargeback protection adds an extra layer of security and helps merchants make better decisions for potentially fraudulent payments.
Delve into Stripe vs Shopify vs Paypal
Related: Chargeback Insurance, Protection, & Prevention: What’s the difference?
Stripe Chargeback Protection
While Stripe is no longer promoting its Chargeback Protection product, it offers a built-in fraud monitoring tool called Radar. Radar ingests billions of data points across the Stripe network from every layer of the financial stack to offer real-time fraud scores and decision suggestions.
The previous Chargeback Protection program required qualifying businesses from the EU and US to enroll. They were offered up to $25,000 in protection limits, with no need to submit evidence for a 0.4% fee per transaction. Stripe accepted specific reason codes for relevant card networks, including “Fraud Full Recourse Treatment,” “Card Absent En vironment,” and “No Cardholder Authorization.”
This has since been replaced with Radar, which not only detects and blocks fraud using machine learning but also stops blocking legitimate customers and adapts to shifting fraud patterns.
Who is eligible?
Every Stripe account is eligible to use Radar.
What protections are available?
Stripe Radar generates compound signals to precisely identify and block fraud.
Radar’s protection features include:
- Device fingerprints: track multiple signals into one device profile
- Historical snapshots: analyze recurring patterns over time
- Proxy detection: Identify IP spoofing and proxy usage
- Cumulative impact: Obtain a real-time score to determine whether a payment is fraudulent
Radar also offers Fraud Teams for fraud professionals, which include a dashboard with optimized reviews, robust insights, custom rules, and block and allow lists.
What are the fees?
Radar’s machine learning is available for 5¢ per screened transaction. This is waived for accounts with standard pricing.
Radar for Fraud Teams is available for 7¢ per screened transaction, and 2¢ for accounts with standard pricing.
Standard pricing is 2.9% + 30¢ per successful charge for domestic cards.
Custom pricing is available for businesses with large payments volumes or unique business models.
Shopify Chargeback Protection
Shopify Protect is Shop Pay’s free, built-in chargeback protection for Shopify merchants. It protects eligible orders against fraudulent and unrecognized chargebacks.
Who is eligible?
Coverage applies to US stores only that use Shop Pay for physical items requiring shipping. Digital products and items picked up in-store are not protected.
Eligibility also requires fulfillment and a tracking number for each order within seven days of order receipt. Orders must be shipped using a supported carrier.
What protections are available?
Shopify Protect uses data from the Shopify network to secure merchants from fraud. Orders are marked as “protection active” when they are eligible for protection. Shopify Protect also allows merchants to filter orders by protection status.
Shopify covers the total order cost, chargeback fee, and handles the dispute process on protected fraud-based chargebacks.
What types of chargebacks are eligible?
Chargebacks are protected for the following chargeback types on protected orders:
- “Fraudulent”: cardholder claims they didn’t authorize the charge
- “Unrecognized”: customer doesn’t recognize merchant name or location on credit card statement
Shopify will debit the disputed amount and chargeback fee from the merchant account. This will be reimbursed immediately as credit, and if the cardholder’s bank resolves the chargeback in your favor, Shopify reverses the credit from Shopify Protect.
What types of chargebacks are not eligible?
Chargebacks for fraudulent or unrecognized chargebacks on unprotected orders are not eligible. These will require a typical chargeback process with your credit card company, and it will involve you submitting evidence.
Other types of chargebacks on either protected or unprotected orders are not eligible.
What are the fees?
Shopify Protect is free with a Shopify account, which has multiple tiers starting at $29 per month in addition to card transaction fees.
PayPal Chargeback Protection
PayPal Chargeback Protection helps eligible merchants reduce the risk of fraudulent credit or debit card transactions.
Who is eligible?
Merchants need a PayPal business account with enabled Advanced Credit and Debit Card (ACDC) checkout to be eligible.
What protections are available?
Once activated in Payment Preferences, PayPal Chargeback Protection can provide risk decision-making on Advanced Credit and Debit Card transactions and decline potentially fraudulent payments. The benefit is that approved transactions that are later marked as fraudulent will be chargeback-protected with additional information, usually proof of shipment/delivery.
PayPal offers an Effortless Chargeback Protection tool for an additional fee, which waives PayPal chargeback fees and disputed amounts without requiring any additional evidence.
What types of chargebacks are eligible?
Chargebacks are protected for:
- “item not received”
- “unauthorized”
The process involves submitting information for review, and PayPal will waive the chargeback fee and remove the hold on the dispute amount.
What types of chargebacks are not eligible?
The chargeback types that are not eligible are all those other than “unauthorized” and “item not received.” Some examples include:
- “Broken item”
- “Significantly not as described”
- “Refund not processed”
- “Duplicate charge”
What are the fees?
Chargeback Protection fees are 0.40% per transaction.
Effortless Chargeback Protection fees are 0.60% per transaction.
If PayPal determines that your Account receives a high amount of customer complaints, reversals, chargebacks, or other indicators or risk, PayPal may increase the percentage components of your Transactions Fees with 30 days notice. This fee is up to 5.00% per transaction.
ChargebackStop Chargeback Protection
Chargeback protection is important to reduce post-chargeback risks for your online business.
ChargebackStop protects against all chargebacks globally– per alert, not transaction.
ChargebackStop also reduces your chargebacks by 99%.
To see our chargeback prevention platform in action, visit ChargebackStop.com and sign up for a free demo.
Do you still have questions? We’re happy to help you figure all this stuff out.
Visit ChargebackStop.com/contact-us for sales or support.
FAQ
What are the differences between Fraud Protection and Chargeback Protection?
For PayPal, fraud protection is a free built-in fraud analysis tool where merchants set the risk rules and filters, and merchants carry liability for any chargebacks. Chargeback protection is risk decisioning available for a fee, and PayPal will waive chargeback fees for “unauthorized” or “item not received.” Shopify used to require users to switch from Fraud Protection to Shopify Protect, but it has now instated Shopify Protect as its default with Shop Pay.