At Armagh POS Solutions, we’ve been helping restaurant and retail businesses in the Greater Hamilton Area keep their registers ringing—and their profits safe—since 1979. Back then, I will admit, the business was simpler. Let’s face it, Online Ordering didn’t exist back then. Since Online Ordering hit the retail scene however, one pain point keeps surfacing with restaurant and retail owners who’ve embraced the technology: the dreaded chargebacks notice. A customer disputes a card-not-present (CNP) transaction, your processor reverses the funds, and suddenly a $35 online pizza order costs you the food, the labour, and the processing fee.
If you’re seeing more of these letters than you’d like, you’re not alone—and you’re not powerless. This article breaks down why chargebacks happen, how to spot the difference between honest mistakes and outright fraud, and the simple behavioural changes that can dramatically reduce your risk.
Credit Cards Were Never Built for Online Orders
Until someone comes up with a better solution, they’re all we’ve got and for most consumers the most convenient way to make an online purchase. Here in Canada however, the rules around “Card Not Present” transactions are blunt: without a “PIN & Chip” transaction the merchant bears the risk. If the cardholder (or their issuer) says “I didn’t do it,” the processor can pull the money back unless you can prove otherwise. With net margins often sitting at 2–3 %, even a handful of $30–$40 losses per month can feel like a gut punch.
The good news? Most chargebacks aren’t inevitable. Many are preventable with better processes and a little vigilance.
Not Every Chargeback Is Theft—But Many Are
Sometimes it’s an honest slip-up. A hungry customer accidentally orders from the wrong location, realises the mistake, re-orders from the correct store, and charges back the first one because calling to cancel felt like too much hassle. We get it—restaurants are busy, phones go unanswered, and life moves fast.
But when our team digs into chargebacks with clients, a far more sinister pattern often emerges:
- One chargeback is rarely alone. Fraudsters test the waters; if the first one succeeds, two or three more usually follow from the same “customer.”
- “Order as Guest” is the fraudster’s favourite checkout. No account creation means no phone verification, no password reset hurdles.
- Contact details scream fake. Phone numbers from area codes nowhere near your restaurant. Emails that don’t match the name on the order. Names that look like they were typed with one finger while laughing—think “George Burns” placing a 2026 takeout order.
- These aren’t subtle. They’re the digital equivalent of walking into your store wearing a name tag that says “Probably Not Paying.”
Decoding the Infamous Chargeback Letter
Every chargeback arrives with a letter from credit card processors—Global Payments, Shift4, Square, whoever it is. The tone is formal, the deadline tight (often just 10 days), and the instructions can feel deliberately opaque.
Here’s the reality behind the legalese, using a recent example we see regularly:
The letter opens by telling you the cardholder initiated the dispute. That’s important—your processor isn’t the enemy; they’re relaying a customer claim.
It then lists the documentation they might accept to fight the chargeback:
- Signed order forms (mail/phone orders) → irrelevant for online.
- Positive AVS + signed proof of delivery → only useful if you’re shipping physical goods with a signature and a GPS coordinated delivery. Most local restaurants and retailers don’t have that.
- Digital goods proof (IP address, download logs) → Are you selling software or NFTs? No? Then it’s not applicable either.
Then comes the line that actually matters:
“If the above does not apply please provide any compelling evidence to show a connection between the cardholder and the person receiving the goods or services or any evidence that proves that the card holder disputing the transaction has used the service or is in possession of the goods.”
In plain English: Show us the fraudster actually placed and benefited from the order.
If you can’t, the processor has no choice but to side with the card issuer. That’s why fighting chargebacks after the fact is an uphill battle. The real win is preventing them in the first place.
Seven Behavioural Changes That Actually Work
Technology helps, but after you have exhausted the tech options, the biggest gains come from small shifts in how your team handles every online order.
- Actually look at the order. When the ticket prints in the kitchen, is the phone number local? Does the name match the email? Does the order itself make sense? Train staff to flag anything weird before the food hits the bag.
- Require each customer create an online ordering “Account”. Many systems have an option to “Order as Guest”. Request this be disabled if yours is turned on. Sure, it may be convenient for customers on the first order— but after they have an account, it’s actually easier. And what you want is repeat customers anyway. In addition, forcing account creation usually comes with some sort of texted phone verification system which adds a layer of protection for you, and a layer of friction and more important tracking that fraudsters hate. Anything that fraudsters hate is a potential benefit for you in your fight against chargebacks.
- Use your video cameras intelligently. Make sure parking-lot cameras catch licence plates and foyer cameras catch faces—not just the tops of baseball caps. Clear footage is powerful evidence when a dispute lands.
- Ask for a signature on pickup. It forces the customer to touch the receipt and pen, look up, and interact. Thieves hate it. You get a signature and better video. The thief won’t like leaving their fingerprints behind either.
- Call suspicious orders back. The pizza industry has done this for decades. A quick “Hi, this is [Restaurant] calling to confirm your order for [name]” catches fakes instantly. Do it for out-of-area numbers or any order that feels off. And if you find you’re currently being targeted by a fraudster, start calling every order until the challenge goes away.
- Ask to see the credit card at pickup. My father always taught me, “If you want to be a winner, find out what the winners are doing and do that.” National chains ask to see the card you used for the order to identify the order. “Can I see the card you used to place the order?” is fast, polite, and devastating to fraudsters. If they claim “my mom ordered it,” ask for a FaceTime. Watch how fast they disappear.
- Train your team. Knowledge is prevention. Share real examples (without naming names) so staff recognise red flags. Put the policy in writing and update whenever you discover a new scam pattern.
You’re Not Powerless—Don’t Be A Victim To Chargebacks Resulting From Fraud
Chargebacks don’t have to be the cost of doing business online. By combining smart online ordering software, vigilant staff, and a few simple verification steps, most merchants we work with cut fraudulent disputes by 70–90%, to the point where disputing them is not important because they are so infrequent. Fail to make these behavioural changes, and unfortunately you are an easy mark and a sitting duck for fraudsters.
About Armagh POS Solutions
Armagh has been serving the retail, restaurant and grocery industries in Canada since 1979, delivering solutions for a range of operators from single-unit small businesses to multi-unit national chains.
We are specialists in touch screen and scanning point of sale (POS) systems for both restaurants and retail stores, cash registers, scales, liquor inventory control systems, and grocery label and wrapping equipment.
With 40+ years POS industry experienced the sales staff at Armagh provides experienced consultants in point-of-purchase management, customer service efficiency, process automation, and restaurant order management.
Armagh’s award-winning Catapult Retail POS Software and Digital Dining POS Restaurant Software are best-in-class, and Armagh is a QIR and Diamond Toshiba Alliance Partner.