SHOPLINE Payments Chargeback & Dispute Guide (HK)

In cross-border e-commerce, a chargeback occurs when a cardholder questions a transaction shown on their credit card statement and formally requests their issuing bank to reverse the charge and return the funds.

According to the Consumer Council, the chargeback mechanism is a consumer protection system provided by international card schemes such as Visa and Mastercard. Under this system, card schemes, issuing banks, and acquiring banks operate under a unified set of rules that allow cardholders—under specific conditions—to request the cancellation of a transaction and the forced return of disputed funds. 

In Hong Kong, regulatory bodies and the Consumer Council also issue guidance to help consumers understand how to submit disputes under local laws and industry practices.

In essence, a chargeback is an "official arbitration process" within the credit card payment network, governed by card-scheme rules to resolve payment disputes between customers and merchants.

The key characteristics of chargebacks include:

• Initiated by the cardholder: All disputes start with the cardholder contacting their issuing bank.
• A formal procedure: A chargeback is not a simple complaint; it follows a structured process defined by the card schemes.
• Impact on merchants: If a dispute is upheld, the merchant loses the transaction amount and must pay a chargeback handling fee. High dispute volumes may harm the merchant’s reputation, result in higher processing fees, or lead to payment service suspension.

This guide explains the types of disputes, SHOPLINE’s role in the process, how disputes are handled at each stage, what documentation is required for different chargeback reasons, and how to reduce the risk of fraudulent transactions.

Types of Credit Card Disputes

If you accept credit card payments, you may encounter credit card disputes. A dispute generally occurs when a cardholder questions a charge and contacts their issuing bank to challenge the transaction. The dispute process can involve several stages. 

In practice, common dispute stages are Retrieval, Pre-chargeback, and Chargeback, and in some cases may further escalate to Pre-arbitration and Arbitration.

Retrieval

A retrieval occurs when a cardholder has questions about a transaction and asks their issuing bank to obtain more information. At this stage, the issuing bank does not immediately refund the disputed amount, but will request supporting documents from you via SHOPLINE Payments.

You must collect and submit the relevant transaction evidence to SHOPLINE Payments in a timely manner. If you do not respond, the retrieval request may be escalated by the issuing bank to a chargeback.

Pre-chargeback

A pre-chargeback is an early warning notice issued by the issuing bank after the cardholder raises a dispute, but before a formal chargeback is submitted. Your funds are generally not frozen at this point, but you must respond within the specified timeframe—for example, by issuing a refund or preparing supporting evidence.

If you fail to act in time, the case is very likely to be upgraded to a formal chargeback.

Chargeback

In many cases, the cardholder may skip the retrieval or pre-chargeback stages and proceed directly to a formal chargeback.

Once a chargeback is initiated, the issuing bank will immediately freeze the disputed amount and charge you a chargeback handling fee. The corresponding amount in your SHOPLINE Payments balance will also be frozen, and the fee will be deducted (see section 8 of the SHOPLINE Payments Terms and User Agreement). You must collect and submit order evidence to SHOPLINE Payments within the required timeframe to contest the chargeback. If you do not respond, the issuing bank will treat this as your acceptance of the chargeback.

All chargeback refund requests must comply with the rules set by the relevant card schemes, including time limits and valid dispute reasons (see, for example, Hong Kong Monetary Authority FAQ – C9).

As a general guideline, cardholders usually need to submit a dispute request to their issuing bank within 180 days from the transaction date, by written request or phone. Specific timelines and procedures vary by card scheme and issuing bank. For instance, Bank of Communications requires disputes to be raised within 60 days from the statement date, with a look-back period of 120 days from the transaction settlement date (see Bank of Communications – Credit Card Chargeback Protection).

For more details on how to accept or contest a chargeback, refer to section C. Chargeback Stage in the Actions Merchants Can Take section.

Pre-arbitration

Pre-arbitration is a formal stage in the dispute process defined by international card schemes. If the issuing bank rejects the evidence you submitted during the chargeback stage, it may request pre-arbitration through the acquiring bank. In some cases—such as Visa disputes involving fraud or authorization issues—the case may enter pre-arbitration automatically when the merchant contests the chargeback.

Pre-arbitration offers the final opportunity to resolve the dispute before it moves to full arbitration. You may submit additional evidence to try to persuade the issuing bank to reverse the chargeback.

This stage does not involve high arbitration fees and serves as a buffer to prevent escalation. However, if a card scheme charges a fee at this stage, the cost will be deducted from your account.

Pre-arbitration is not mandatory. If you accept the chargeback during the chargeback stage, the dispute will not proceed to pre-arbitration.

Arbitration

If the dispute remains unresolved after pre-arbitration, either party may escalate the case to the relevant card scheme (such as Visa or Mastercard) for a final decision. This is known as arbitration.

Arbitration is a high-cost process. If you lose, you will not only bear the disputed amount, but also a substantial, non-refundable arbitration fee, often amounting to several hundred US dollars.

Before deciding to escalate to arbitration, carefully assess:

• Whether your evidence is strong and persuasive enough
• Whether the disputed amount significantly exceeds the arbitration fee
• Whether you are prepared to bear both the disputed amount and the arbitration fee if you lose

Arbitration rulings are final and binding, and the losing party must comply. We strongly recommend that you fully discuss the case with the SHOPLINE Payments team and assess the risks before deciding whether to proceed to arbitration.

Summary

In the credit card dispute process, Retrieval and Pre-chargeback are early stages that serve as a warning or information-gathering step before a formal chargeback. Note that not all disputes will go through every stage; many cases move directly to a formal chargeback. At the retrieval and pre-chargeback stages, the disputed amount is usually not immediately frozen or deducted (although certain pre-chargeback scenarios may incur a small handling fee). You still have the opportunity to resolve the issue proactively—for example, by issuing a refund or communicating with the customer—to prevent escalation to a formal chargeback.

Once a transaction enters the chargeback stage, SHOPLINE, as the payment service provider, will freeze or deduct the disputed amount as required by the issuing bank and charge the applicable chargeback handling fee. You may then choose to accept the chargeback or submit evidence to contest it.

If you disagree with the chargeback outcome and have strong supporting evidence, the dispute may proceed to Pre-arbitration or Arbitration. These stages are optional and are typically used only when both parties cannot reach an agreement.

SHOPLINE’s Role in the Chargeback Process

When a cardholder initiates a chargeback, SHOPLINE Payments provides you with a channel to submit supporting evidence. We will promptly forward the evidence you provide to the issuing bank through our partnered payment networks for their review.

If your chargeback dispute is unsuccessful and you still disagree with issuing a refund to the customer, you may escalate the case through the acquiring bank by submitting additional documents. At this point, the case may proceed to the arbitration process defined by the international card schemes.

Arbitration Outcomes and Responsibilities

• If you lose: You must bear the disputed amount, and the arbitration fee will not be refunded.
• If you win: The full transaction amount and the arbitration fee will be refunded to you.

If you decide to proceed with international arbitration, SHOPLINE will deduct the required arbitration fee in advance. You must also provide your reasons for disputing the chargeback, submit supporting evidence, and translate all documents into English to comply with the card schemes’ requirements.

Fee Currency and Exchange Rate Considerations

How the Currency for Arbitration Fees Is Determined

Arbitration fees are charged in USD or EUR, depending on the location of the acquiring bank (the merchant’s settlement bank). This determines whether a transaction is classified as domestic or international and therefore which fee currency applies.

Importantly, the fee currency is not based on the cardholder’s location or the merchant’s business address. It is determined by the issuing bank’s country/region. General rules:

• International transactions: processed in the merchant’s local currency
• Domestic transactions: processed in the cardholder’s local currency (unless otherwise specified by the merchant)

How Foreign Currency Cards Affect Chargeback Refund Amounts

When a customer uses a foreign currency card—a card whose billing currency differs from the issuing bank’s local currency—the refunded amount during the chargeback process may vary due to exchange rate fluctuations.

Because foreign currency transactions are recalculated using the exchange rate at each stage, the frozen amount, deducted amount, and final refunded amount may differ. Please note the system behavior:

• After a chargeback is initiated, the originally frozen amount is settled to the merchant as usual.
• If you ultimately win the dispute, the issuing bank recalculates the refund based on the exchange rate on the decision date.

Exchange rate movements can work in your favor or against you, resulting in either gains or losses.

Amounts are calculated as follows:

• Original order amount: based on the exchange rate on the payment date
• Chargeback initiation amount: based on the rate on the dispute initiation date
• Chargeback lost amount: based on the rate on the decision date if you lose
• Chargeback won amount: based on the rate on the decision date if you win

Example

A U.S. customer purchases from a Hong Kong merchant. Order amount: 100 HKD.

• Payment date (August): Assuming the exchange rate on the payment date was 1 USD = 7.5 HKD, the customer was charged 13.33 USD, and you received 100 HKD as the transaction amount.
• Chargeback initiated (September): When the customer initiated the chargeback, the exchange rate had risen to 1 USD = 7.8 HKD. At this rate, 13.33 USD was equivalent to 103.97 HKD, and the system deducted 103.97 HKD from your account as the disputed amount.
• Merchant wins (October): When the dispute was decided in your favor, the exchange rate had further increased to 1 USD = 7.9 HKD. The issuing bank was required to refund the equivalent of 13.33 USD to you, which converted to 105.31 HKD. As a result, your account received a refund of 105.31 HKD.

Summary of Fund Movement:

• Initial income: 100 HKD
• Chargeback deduction: 103.97 HKD
• Refund upon winning: 105.31 HKD

Net impact: Due to favorable exchange rate movements, you gain approximately 5.31 HKD (excluding any related fees). However, exchange rates fluctuate in both directions, and actual outcomes may vary, including potential losses.

How Disputes Are Processed

A dispute begins when a cardholder contacts their issuing bank to challenge a payment made to your store. Depending on the stage of the dispute, the case may go through several possible processes described below.

Common Dispute Processes

Pre-Chargeback Process

A pre-chargeback is a warning notice issued by the issuing bank after the cardholder raises an objection but before a formal chargeback is submitted. Its purpose is to give you an opportunity to resolve the dispute proactively.

• The cardholder submits a dispute to the issuing bank.
• The issuing bank issues a pre-chargeback notice. Funds are usually not frozen at this stage, although in some cases a small processing fee may be temporarily held.
• The issuing bank notifies you of the dispute through SHOPLINE Payments.
• You may choose to issue a refund or prepare evidence showing that the transaction is valid.
• If you do not respond within the required timeframe, the dispute may escalate to a formal chargeback.

Retrieval Process

A retrieval is initiated when the cardholder or issuing bank needs additional information about the transaction.

• The cardholder submits a dispute to the issuing bank.
• The issuing bank submits a retrieval request, and the transaction amount remains unfrozen.
• The issuing bank requests supporting documents through SHOPLINE Payments.
• You must collect and submit evidence to verify that the transaction is valid.
• Once SHOPLINE Payments receives your documents, they will forward them to the issuing bank.
• After review, the issuing bank will notify both you and the cardholder of the retrieval result.

Chargeback Process

If the retrieval stage does not resolve the issue, or if the cardholder directly initiates a chargeback, the process enters the formal chargeback phase.

• The cardholder submits a dispute to the issuing bank.
• The issuing bank initiates the chargeback. The disputed amount is frozen, and the chargeback handling fee is immediately deducted.
• The issuing bank requests supporting evidence through SHOPLINE Payments.
• You must collect and submit evidence proving the validity of the transaction.
• SHOPLINE Payments forwards your evidence to the issuing bank for review.
• The issuing bank reviews all evidence and notifies both parties of the chargeback decision.
• You may choose to accept the chargeback and conclude the dispute.

Pre-Arbitration Process

If you disagree with the chargeback outcome and wish to appeal, you may request to proceed to the pre-arbitration stage. Similarly, if the cardholder or issuing bank disagrees with your defense, they may also escalate to pre-arbitration.

• After an unsuccessful chargeback defense, you may submit a pre-arbitration request through the acquiring bank.
• You must provide additional, stronger evidence.
• The issuing bank reviews all materials again.
• If the issuing bank accepts your new evidence, the chargeback will be reversed; if not, the case may proceed to arbitration.

Arbitration Process

Arbitration is the final decision mechanism provided by the international card schemes and is formal and high-cost.

• If pre-arbitration fails to resolve the case, either party may escalate the dispute to arbitration.
• You must provide a full set of arguments and supporting documents, translated into English as required.
• The card scheme will conduct a final review and issue a binding decision.
• The losing party must bear both the disputed amount and the arbitration fees, which typically total several hundred USD/EUR.

Actions Merchants Can Take

When a dispute is raised on a transaction, you will receive an email notification from us, and you can also view it directly in the SHOPLINE Payments account center. Each notification includes the disputed order details and the specific dispute reason submitted by the cardholder to the issuing bank. Depending on the dispute stage, you can handle it in the following ways:

Contact the Customer

You can contact the customer by phone or email to understand the reason for the dispute and try to resolve it through negotiation. 

If the customer agrees to withdraw the dispute, they must contact their issuing bank to cancel it and obtain official proof of withdrawal (for example, an email or other valid confirmation from the bank). You will then need to submit this proof as part of the documentation to complete the dispute cancellation process.

Provide Stronger Supporting Evidence

At any stage—retrieval, chargeback, pre-arbitration, or arbitration—you should prepare and submit supporting evidence within the required timeframe. The type of evidence should match the dispute reason. Common examples include:

• Proof of customer authorization (e.g., signed order, IP address, device information)
• Proof of shipment (e.g., tracking number, delivery/receipt confirmation)
• Your website’s refund policy and terms of service
• Communication records between you and the customer

If your store is closed or suspended, you can still reply to dispute emails and submit basic transaction information. However, to view full order details or customer information, you may need to reopen the store (which may incur plan-related fees). If you choose not to reopen, you can only submit whatever transaction evidence you already have on hand.

How to Handle Disputes at Each Stage

You can log in to the SHOPLINE Payments admin and click Disputes in the left-hand menu to view and manage disputes at different stages.

A. Pre-Chargeback Stage

• Refund: If you agree with the dispute reason, click Refund to proactively issue a refund. The dispute will then be closed and, in most cases, no additional fee will apply. (In some scenarios, a pre-chargeback handling fee may be charged; please refer to the actual situation.)
• Reject: If you do not agree, you can click Reject on the page. This means you refuse to resolve the dispute by issuing a refund or other means. In this case, the dispute is highly likely to be escalated to a formal chargeback.

B. Retrieval Stage

• Issue a refund: If you accept the reason for the retrieval, you can issue a full refund to close the case. Please note that partial refunds may not prevent the dispute from being escalated later into a full chargeback.
• Contact SHOPLINE Payments: If you believe the transaction is valid and do not wish to refund in order to avoid escalation, and you can provide the documents required for retrieval, please contact us proactively so we can help you submit the retrieval materials.

C. Chargeback Stage

• Accept dispute: If you agree with the chargeback, you can choose to accept it. In this case, you do not need to submit evidence. The disputed amount will be returned to the cardholder, and the chargeback handling fee will not be refunded.
• Challenge dispute: If you disagree with the chargeback, you must submit supporting evidence within the specified timeframe. The final result will be determined by the issuing bank.

To submit evidence through SHOPLINE Payments:

1. In your SHOPLINE Payments account center, go to Dispute, locate the specific dispute, and click View in the Action column. 

2. On the dispute details page, click the Challenge dispute button to open the evidence submission form.

   

3. Fill in the basic order information, including the logistics provider, tracking number, and shipment date.

4. If you have additional supporting documents that help prove the transaction is valid, you can upload them in the respective sections, for example:

   Note: Please upload targeted evidence based on the specific chargeback reason to improve your chances of winning the dispute

   • Communication records with the customer
   • Screenshots of order details
   • Shipment and tracking details, including delivery status
5. Once you have confirmed that all information and files are correct, click Submit to complete the process.

D. Pre-Arbitration Stage

• Accept: If you do not wish to bear the additional costs and risks of further escalation, you can accept the previous chargeback result.
• Dispute (continue to appeal): If you wish to continue appealing, you can submit new supplemental evidence through SHOPLINE Payments and attempt to persuade the issuing bank to reverse the chargeback before the case moves to arbitration.

The overall handling flow in pre-arbitration is similar to the chargeback stage and can be referenced accordingly.

E. Arbitration Stage

• Escalate to arbitration: If you remain dissatisfied with the pre-arbitration result or can no longer reach an agreement with the customer regarding the dispute, you may choose to escalate the case to arbitration. You will need to contact SHOPLINE Payments to initiate this process.

Fees Associated with Disputes

To cover the administrative and processing costs of dispute resolution, the relevant fees are charged based on the stage reached when a cardholder initiates a chargeback or arbitration. These fees help support activities such as dispute investigation, documentation review, coordination with payment partners, and arbitration procedures.

The fees involved are as follows:

• Pre-chargeback fee: Deducted once a pre-chargeback case is accepted.
• Chargeback fee: Deducted immediately when a chargeback occurs.
• Pre-arbitration (second chargeback) fee: Deducted when a dispute enters the pre-arbitration stage.
• Arbitration fee: Deducted when the case is formally submitted to the card scheme for arbitration.

The fee refund rules are as follows:

• Arbitration fee: Refunded only if the merchant wins the arbitration.
• Pre-chargeback fee, chargeback fee, and pre-arbitration fee: These fees cover the necessary processing costs for earlier dispute stages and are non-refundable, regardless of the final dispute outcome.

Evidence to Submit for Different Chargeback Types

To help you handle credit card disputes more effectively, SHOPLINE Payments has grouped the complex card-scheme chargeback codes into seven common categories. Please prepare and submit the appropriate evidence based on the specific dispute reason.

Product or Service Not Received

Dispute reason: The customer claims they did not receive the product or service.

Prevention tips:

• Ship orders promptly and provide an estimated delivery time.
• Provide a tracking number and traceable shipping information.
• For high-value items, require a signed delivery receipt.
• Offer clear and accessible customer service contact information.

Required evidence if the issue cannot be resolved with the customer:

• Shipment date and time
• Customer payment information
• Delivery address
• Proof of delivery / signed receipt
• Any other supporting documents

Product Not as Described

Dispute reason: The customer claims the item does not match the description, images, or promises on your website.
Prevention tips:

• Ensure product descriptions are accurate, complete, and not misleading.
• Pack products properly to avoid damage during shipping.
• Take responsibility during after-sales handling instead of directing customers to manufacturers or couriers.

Required evidence if the issue cannot be resolved with the customer:

• Shipment date and time
• Customer payment information
• Proof of delivery / successful receipt
• Explanation or images proving the product matches the description
• Any additional relevant evidence

Refund Not Issued After Cancellation

Dispute reason: The customer states they cancelled the order or returned the item but did not receive a refund.

Prevention tips:

• Display refund/return/cancellation policies clearly before checkout.
• Issue refunds promptly when customers are entitled to them under your store policies.

Required evidence if the issue cannot be resolved with the customer:

• Your store’s refund or return/exchange policy
• Emails or notices sent to the customer explaining the refund policy
• Explanation for why the customer is not entitled to a refund
• Any other supporting documents

Duplicate Charge

Dispute reason: The customer was charged more than once for the same transaction.

Prevention tips:

• Immediately refund any accidental duplicate charges.
• Provide clear receipts showing the breakdown of each charge.

Required evidence if the issue cannot be resolved with the customer:

• Explanation showing why multiple charges are valid transactions
• Receipts for different items or services
• Communication records regarding payment details
• Any other supporting materials

Unrecognized Transaction

Dispute reason: The customer does not remember or recognize the transaction on their statement.

Prevention tips:

• Use a clear and identifiable billing descriptor (e.g., your store name).
• Send order confirmation receipts immediately after purchase.

Required evidence if the issue cannot be resolved with the customer:

• Shipment date and time
• Customer payment information
• Customer’s IP address and country/region
• Proof of delivery / signed receipt
• Any other supporting documents

Other Dispute Reasons

Dispute reason: The issue does not fall into any of the categories above.

Required evidence if no agreement is reached (If not provided, we will consider the chargeback accepted and refund the amount to the cardholder):

• Detailed product information
• Shipment date and time
• Customer payment information
• Customer’s IP address and country/region
• Email or communication records with the customer
• Proof of delivery / signed receipt
• Evidence related to refunds or return/exchange actions
• Any other supporting materials

Unauthorized or Fraudulent Transactions

Dispute reason: The customer claims the transaction was not authorized.

Required evidence if no agreement is reached:

• Order shipment date, time, and delivery address
• Customer payment information
• Email communications with the customer
• Order IP address and country/region
• Proof of delivery / signed receipt
• Photos of the card used (front and back with signature), or the cardholder’s statement showing the transaction and cardholder information
• Any other relevant evidence

How to Prevent Fraudulent Transactions

A fraudulent transaction refers to a payment made without the cardholder’s authorization. Such transactions frequently lead to chargebacks and financial losses for merchants. We recommend paying attention to the following risk indicators and taking appropriate preventive measures:

Different buyers, same delivery address

If multiple orders with different names, emails, or IP addresses are all being shipped to the same address, this may indicate organized fraud. Contact the customer to verify the order details and reduce potential risk.

Unusually high order amounts

If you receive an order significantly higher than your typical transaction value, conduct additional verification. Ask the customer about their purchase intent—if their explanation is vague or inconsistent, treat the order with caution and delay processing if necessary.

Check whether the IP address matches the delivery address

Fraudsters often place orders from an IP address that does not align with the shipping location. You can use Google Maps or IP lookup tools (e.g., http://www.whatismyip.com/ip-tools/ip-address-lookup) to check the IP region.

If the IP location is far from the delivery address (e.g., a different country), exercise caution. However, remember to consider legitimate scenarios such as personal shoppers or sending gifts.

High-value or easily resold items

Products such as branded electronics are frequently targeted because they are easy to resell. For suspicious orders involving high-value items, call the customer to verify the delivery address and contact details to reduce fraud risk.

Requests for urgent or same-day shipping

Fraudsters often pressure merchants with requests such as "urgent delivery" or "ship within 24 hours." For physical goods, consider delaying shipment by 24–48 hours to allow time for the legitimate cardholder to detect and report unauthorized activity. Although you may still receive a fraud dispute, at least you can avoid losing the merchandise.

Verify the email address

Search the customer’s email address on Google or other platforms to check whether it has been reported for fraud or whether it is linked to a legitimate social media profile.

Verify order information by phone

Fraudulent orders often use invalid phone numbers. If someone answers, ask basic order-related questions (such as confirming the address or name). If they cannot respond clearly, delay shipment and keep a record of the communication.