Square Chargeback Protection: How To Supplement It

Anyone running a business knows Square—the go-to payment processor for quick, mobile-friendly payments. But as convenient as Square is, chargebacks can still wreak havoc on your revenue. So, what does Square chargeback protection offer, and is it enough? Let’s dive in and explore how we might be able to assist at CB-Alert.

What Is a Square Chargeback?

A Square chargeback occurs when a customer disputes a transaction processed through the Square network. Reasons for disputes are usually due to fraudulent transactions, incorrect charges, or dissatisfaction with a product or service. Once a dispute is initiated, the customer’s card issuer notifies Square, which deducts the disputed amount from the merchant’s account until the dispute is resolved.

How Square Chargeback Protection Works

Square offers a three-pronged approach to chargeback protection for merchants:

Fraud Detection

Square employs machine learning and transaction data from its network to detect and flag suspicious transactions. It alerts merchants to potentially fraudulent activities to help mitigate chargebacks before they occur.

Dispute Resolution Assistance

Square provides a Dispute Dashboard where merchants can manage disputes. Their dispute resolution team advocates on behalf of merchants by coordinating with the customer’s issuing bank and submitting the necessary evidence. However, merchants must still gather and submit documentation, such as proof of delivery or communication records, which can take time and effort.

No Chargeback Fees

Square does not charge merchants additional fees for disputes, unlike many payment processors. However, normalprocessing fees (2.95%) still apply for lost disputes, and merchants remain responsible for the financial impact of reversed transactions.

Limitations of Square Chargeback Protection

While Square’s system provides some protection, it has notable shortcomings that leave merchants vulnerable:

No Reimbursement for Chargebacks

Previously, Square reimbursed merchants up to $250 per month for eligible chargebacks, even if they lost the dispute. However, this program was discontinued in 2019, meaning merchants are now fully responsible for the financial consequences of chargebacks.

Example: If you sell premium nail polish sets priced at $150 each, and two disputes are filed in one month, Square’s previous coverage would no longer apply. Any additional disputes or higher-ticket items would leave you entirely exposed.

Limited Support for High-Risk Items

Products classified as high-risk—such as electronics, luxury goods, and collectibles—often fall outside of Square’s protection policies. These categories are frequent targets for fraud, making them particularly vulnerable.

Burden on Merchants to Gather Evidence

While Square’s team advocates for merchants, the responsibility of compiling evidence still falls on the business owner. 

Revenue Freezes During Disputes

Square freezes funds related to disputed transactions until the case is resolved, which can take up to 90 days—or an additional 60 days if an appeal is filed. For small businesses, this delay can disrupt cash flow and operations.

Why Square’s Protection Isn’t Enough

Square’s chargeback protection offers a solid foundation for dispute management, but it stops short of comprehensive coverage. Without reimbursement and with limited support for high-risk transactions, merchants face financial exposure and operational challenges.

How CB-Alert Can Fill the Gaps

CB-Alert provides a robust chargeback mitigation solution that complements Square’s existing protections, helping merchants take full control of their chargeback processes. Here’s how CB-Alert stands out:

Chargeback Prevention Alerts via CB-Alert: Stay One Step Ahead

Preventing chargebacks before they happen is key to protecting your revenue, and that’s where we shine at CB-Alert. Chargeback prevention alerts notify you of disputes before they become full-blown chargebacks, allowing you to resolve issues directly with customers.

Here’s how CB-Alert can help:

• Real-Time Notifications: Get instant alerts for potential disputes, allowing you to act quickly and prevent a chargeback from being filed.
• Streamlined Resolution: Resolve disputes directly by refunding customers or addressing their concerns, reducing the chance of losing revenue and incurring penalties.
• Comprehensive Reporting: CB-Alert offers detailed analytics on disputes, helping you identify patterns and improve your operations to avoid future chargebacks.
• Automation Made Easy: With CB-Alert, managing alerts is seamless. Our system integrates into your existing payment processes, minimizing manual work and freeing up your time.

Proactive Chargeback Prevention

CB-Alert leverages advanced technology to monitor real-time transactions, flagging potential fraud and preventing disputes before they occur.

Full-Service Dispute Management

CB-Alert handles and automates the entire chargeback lifecycle, unlike Square—from collecting evidence to submitting representment and appealing unfavorable decisions. This frees up your time to focus on growing your business.

Comprehensive Support Across Industries

CB-Alert supports businesses in high-risk categories, such as electronics, luxury goods, and subscription services, providing tailored solutions to reduce chargebacks and recover lost revenue.

Fast Revenue Recovery

By addressing disputes promptly and effectively, CB-Alert minimizes revenue freezes and ensures faster resolution times, keeping your cash flow intact.

Why Partner with CB-ALERT for Chargeback Management?

Should you be looking to avoid chargebacks and build a successful business., we are proud to offer the following for all of our clients.

• Real-time alerts from Ethoca and Verifi
• 24/7 customer support
• Transparent pricing structures
• Advanced fraud prevention tools
• Compatibility with multiple gateways and CRMs

The Bottom Line

Square’s chargeback protection provides valuable tools for merchants, including fraud detection, dispute resolution assistance, and fee waivers. However, its limitations—such as the lack of reimbursement, limited coverage for high-risk items, and the burden on merchants to manage evidence—make it insufficient for businesses facing frequent disputes.

CB-Alert, we offer the perfect complement, with proactive prevention, full-service dispute management, and comprehensive support for high-risk industries. Protect your business, recover your revenue, and stay ahead of chargebacks with CB-Alert.