How Restaurants Can Prevent and Manage Chargebacks

How Restaurants Can Prevent and Manage Chargebacks
Many restaurants have moved business online in 2020, making purchasing more seamless and convenient for customers. With the rise in convenience that curbside pickup, and order ahead have brought customers, they have also, increased disputes.
by Deborah Findling Dec 10, 2022 — 4 min read
How Restaurants Can Prevent and Manage Chargebacks

This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional.

Many restaurants and coffee shops have moved business online in 2020, making purchasing more seamless and convenient for customers. In fact, 3 in 4 restaurants plan on offering contactless ordering and payment options, with 61% utilizing contactless payments on premise. With the rise in convenience that curbside pickup, order ahead, and delivery options have brought customers, they have also, in turn, increased disputes for business owners. The increase in disputes has been attributed to a range of causes from confusion around delivery time to fraudulent credit card orders that have taken a toll on small businesses.

While some chargebacks are tied to criminal fraud, many might not be. Friendly fraud refers to customers who make a purchase online and claim a chargeback with their credit card company rather than requesting a refund from the merchant. In these cases, customers who may not recognize a charge, or feel frustrated with a slow delivery, may simply dispute the charge rather than communicate with the business.

What is a chargeback?

A credit or debit card chargeback is a payment dispute where money is returned to a customer who disputes a credit or debit card transaction successfully. Chargebacks can be categorized as fraudulent or non-fraudulent. Fraudulent transactions are cases in which a customer’s card was used without their knowledge or authorization, whereas non-fraudulent transactions can occur if something is wrong with the order, a delivery was cancelled, or the order was not received at all.

How to prevent credit and debit card disputes

Whether your business has seen fraudulent or non-fraudulent related chargebacks, there are several best practices to help prevent disputes before they happen. 

Preventing fraudulent transactions

Preventing non-fraudulent transactions

There are a few ways to protect your restaurant from common non-fraudulent chargebacks. 

How to manage credit and debit card disputes

If you own a restaurant, coffee shop, bakery, or bar and have already seen an increase in disputes, here are a few best practices for mitigating them.

Managing fraudulent transactions

There are several details that may help protect your business in the case of a fraudulent chargeback. Here are some things to consider keeping track of if you should need to fight a chargeback.

Managing non-fraudulent transactions

Collecting the following information can help you protect your restaurant from non-fraudulent transaction disputes.

Pickup orders

Delivery orders

Signatures upon delivery aren’t the norm when it comes to food delivery, but there are still some best practices when it comes to card-not-present transactions.

For restaurants that have moved their businesses online, experiencing an increase in fraud disputes can make them feel blindsided. Businesses have been resilient by finding new ways of doing business, but unexpected chargebacks can still be very painful. By communicating with customers and keeping track of orders, you can help prevent and mitigate chargebacks.

Deborah Findling
Deborah Findling is an editor at Square, where she writes about investment, finance, accounting and other existing and emerging payment methods and technologies.


Keep Reading

Tell us a little more about yourself to gain access to the resource.

i Enter your first name.
i Enter your last name.
i Enter a valid email.
i Enter a valid phone number.
i Enter your company name.
i Select estimated annual revenue.
i This field is required.

Thank you!
Check your email for your resource.

Results for

Based on your region, we recommend viewing our website in:

Continue to ->