Chargebacks vs. Refunds: How Noon Payments Safeguards Your Business in KSA, UAE & Egypt 

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Understanding Chargebacks vs. Refunds is crucial for MENA businesses. While refunds are merchant-initiated and preserve customer trust, chargebacks are bank-driven and often costlier. Noon Payments helps merchants in Saudi Arabia, UAE, and Egypt manage both effectively, offering refund tools and fraud prevention to reduce disputes and safeguard business revenue.

Chargebacks vs. Refunds: What’s the Difference?

Refunds: Customer-Requested Reversals

• A refund occurs when a merchant voluntarily returns money to the customer, typically due to a product return, service issue, or order cancellation. 

• Example: A customer in Dubai orders a smartwatch but finds it defective upon arrival. They request a refund via your online payment gateway, and you process it, keeping customer satisfaction intact. 

Chargebacks: Bank-Led Transaction Reversals

Chargebacks happen when a customer disputes a charge directly with their bank, bypassing the merchant. Banks review and present the case to the merchant for them to either accept or defend the chargeback. Depending on the action the customer will either win or lose their disputed case.

Why This Matters for MENA Businesses

Chargebacks Hurt More Than Refunds

• Higher Costs: Merchants face fees, revenue loss, and even increased payment processing rates. 

• Reputational Risk: Too many chargebacks can lead to stricter regulations from payment providers and/or schemes. 

Refunds Are a Safer Alternative

• You Maintain Customer Trust: A seamless refund process prevents unnecessary disputes. 

• Faster Resolutions: Refunds resolve issues before they escalate into chargebacks. 

How Noon Payments Reduces Chargebacks in Saudi Arabia, UAE & Egypt

Fraud Detection for MENA Markets

Noon Payments’ secure payment gateway integrates fraud detection tools that helps reduce fraudulent chargebacks before they occur.

Refund Tools to Prevent Disputes

• Noon Payments enables merchants to issue refunds quickly and efficiently, reducing the likelihood of customers resorting to chargebacks. 

• Example: A customer in Cairo wants to return an item. With Noon Payments, you can process their refund within a few days, preventing a potential chargeback dispute. 

Chargeback Management Tool

While chargebacks are ultimately handled by banks, Noon Payments provides a chargeback management tool that allows businesses to track and record disputed transactions as well as monitor chargeback trends via the merchant portal.

Key Features: 

• Dispute Tracking Dashboard: Update transaction status to reflect chargebacks. 

• Merchant Portal for Evidence: Detailed transaction information available for evidence support when chargebacks are raised by the banks. 

Clear Transaction Records for Dispute Resolution

Noon Payments provides businesses with access to transaction history and key elements in contesting illegitimate chargebacks.

Types of Chargebacks MENA Businesses Face

Service-Related Chargebacks

These occur when a customer claims that the service paid for was never delivered or was not as described. In service industries such as digital consulting, travel bookings, or even online learning, this is common.

Example: A customer books a spa treatment online using your online payment gateway, but the spa is closed on the appointment date. Instead of requesting a refund, the customer disputes the charge with their bank, initiating a service-related chargeback. 

Prevention Tip: Ensure accurate service descriptions, real-time availability updates, and fast customer communication.  

Authorization-Related Chargebacks

This type of chargeback happens when a customer claims they never authorized the transaction, often due to fraud or stolen payment details. 

Example: A shopper in Riyadh notices a charge they didn’t recognize on their credit card after purchasing from an online store. They contact their bank and initiate a chargeback, stating it was unauthorized. 

Solution: Use advanced fraud detection and customer authentication tools. Noon Payments offers secure payment gateway features with fraud detection and tokenized card storage to minimize unauthorized transactions.

Defective Goods and Services Chargebacks

These disputes stem from customers receiving faulty products or substandard services. Even with good intentions, a defective item can trigger a dispute if not handled swiftly. 

Example: A customer in Dubai receives a malfunctioning coffee maker and contacts customer service, but there’s no response for several days. Frustrated, they contact their bank to reverse the charge. 

Business Tip: Communicate promptly. Offer return policies clearly and make refunds easy to access. Noon Payments allows for online payment processor-enabled refunds directly from your merchant dashboard. 

Partial Refund Chargebacks

Sometimes, customers request a full refund even after accepting a partial one. This can create complex disputes where both the merchant and the customer provide evidence. 

Example: A customer buys two shirts but only one arrives. You refund for the missing item, but the customer later disputes the full transaction amount with their bank. 

Avoidance Strategy: Maintain crystal-clear refund communications and track partial refunds accurately through Noon Payments’ merchant portal. Attach refund receipts and shipping logs to your evidence package when contesting such chargebacks. 

Why MENA Businesses Lose Money to Chargebacks

Common Causes in KSA, UAE & Egypt

1. Unclear Policies: Vague refund and return policies confuse  customers. 

2. Weak Fraud Filters: Some small businesses lack region-specific payment security features. 

The Hidden Costs of Chargebacks

• Chargeback Fees: Payment gateway providers and/or acquiring banks charge merchants for each dispute plus potential arbitration fees. 

• Revenue Loss: Not only do you lose the sale, but also the product itself. 

• Higher Processing Rates: Excessive chargebacks label you as a high-risk merchant, leading to increased fees from payment processors. 

Ready to Secure Your Revenue?

Choose the Best Payment Gateway for MENA

Noon Payments offers: 
Arabic-language support for easy customer interactions. 
Localized payment options (mada, Knet, Benefit & Meeza). 
Chargeback management tools to protect your business. 

FAQs: Chargebacks & Refunds in MENA

What’s the best payment gateway for small businesses in Saudi Arabia?

Noon Payments offers low fees, Arabic support, and compatibility with Mada, Visa, Mastercard, American Express, KNet, Benefit, Meeza, and more payment methods to minimize disputes and chargebacks.

How do I reduce chargebacks in Egypt?

Providing clear refund policies, solid evidences in case of chargebacks, and strong payment partners such as Noon Payments to proactively defend chargeback cases.

Can Noon Payments stop chargebacks?

Noon Payments does not directly manage chargebacks—banks handle them. However, we offer fraud prevention, refund tools, and a basic chargeback management tool to help businesses reduce disputes.

What happens if my business has too many chargebacks?

Excessive chargebacks can increase processing fees and put your merchant account at risk of suspension. It’s essential to implement fraud protection and clear refund policies.

How quickly can I process refunds with Noon Payments? 

Refunds through Noon Payments are processed instantly however, the funds get transferred from the bank to customer card typically between 7-14 working days depending on the customer’s bank and payment method used.