Techable sells high value consumer electronics online. Consumer electronics is one of the higher risk categories for ecommerce fraud because the products are expensive, portable, and easy to resell.
At one point our chargeback rate hit roughly 6% over a 90 day period. Funds were being held and the payment processing relationship was at risk.
Losing a laptop to a stolen card is bad. Losing reliable payment processing is worse. An ecommerce business can look healthy on revenue and still be in real trouble if the money stops landing in the bank on a normal schedule. That is where we were.
So I treated it as an operational problem instead of a run of bad luck, and changed how we decided which orders to ship.
What we changed to reduce ecommerce chargebacks
- Cancel obvious high risk orders before fulfillment. High risk orders were automatically cancelled rather than fulfilled. Refunding a good order occasionally costs less than shipping a fraudulent one.
- Manually verify the suspicious ones. Orders that were not obvious auto cancels got looked at by a person before anything shipped.
- Compare payment, billing, shipping and location signals. We used IP, VPN and location distance signals along with billing, shipping and order mismatches as part of the review.
- Ask for proof when it mattered. On some orders we required the customer to prove the payment method matched checkout before we shipped, including transaction or payment plan proof.
- Require stronger delivery proof on expensive shipments. Higher value shipments went out with signature requirements.
- Keep dispute evidence organized. We got stricter about preserving delivery, signature, tracking and customer communication records so a dispute response was not a scramble.
- Review the process, not just individual chargebacks. Every dispute told us something about the screening rules, and the rules changed as we learned.
We got the chargeback rate to 0%. That is not a permanent guarantee, and I would not present it as one. It means the process worked and the pressure on our payments came off.
What changed things for us was not one fraud app. We built a process that decided which orders to cancel, which orders to verify, and what evidence to keep. Shopify's own fraud analysis tools are useful as an input, but the decision still belongs to somebody who understands the orders.
Questions I get about this
How can an ecommerce business reduce chargebacks?
Decide which orders you are willing to ship before you ship them. Cancel obvious fraud, manually verify anything ambiguous, compare payment, billing, shipping and IP or VPN signals, require delivery proof on expensive orders, and keep the evidence organized so you can answer a dispute later. No process removes chargebacks entirely, but a consistent one lowers them.
Can a high chargeback rate lead to payment holds or reserves?
Yes. When disputes are elevated, processors may hold or reserve funds, add scrutiny, or treat the business as high risk. Thresholds and rules vary by processor and card network and they change, so check what applies to your account.
How should Shopify merchants handle high-risk orders?
Treat the built in risk analysis as one input, not the decision. Cancel and refund the obvious fraud, manually review the ambiguous orders, ask for verification when the details do not line up, and collect delivery evidence instead of fulfilling and hoping.
Payment processors and card networks set their own thresholds and rules and they change. Check your processor's current requirements for your account rather than relying on general numbers.