Chargebacks in Canada: how card disputes work for merchants

Chargebacks in Canada work much the way they do in the US. A cardholder disputes a credit card charge with their bank, the bank sends it back through Visa or Mastercard, and your acquirer takes the money out of your account while you respond. Two things are distinctly Canadian, though. Interac Debit, the way many Canadians pay at the counter, has no chargebacks, according to Interac. And Quebec's Consumer Protection Act gives consumers a legal right to a chargeback on some online and phone sales when the merchant doesn't refund in time.

This guide covers how card disputes reach a Canadian merchant, which payments can be charged back, what Quebec and Ontario add, the monitoring thresholds that apply here, what the Code of Conduct says about fees, and how to prevent disputes in the first place. Rules are as of October 2026. For the general dispute process step by step, see how a chargeback works.

How do chargebacks work in Canada?

A chargeback starts with the cardholder's bank, not with you. The Financial Consumer Agency of Canada describes a chargeback as a consumer asking their credit card issuer to reverse a transaction they made on their credit card because of a disputed transaction. FCAC adds that each payment card network has its own guidelines on chargebacks, and that other rules, such as provincial laws, may also apply.

From the merchant's side, it runs like this:

1. Your customer disputes a charge with their card issuer.
2. The issuer checks the claim against Visa's or Mastercard's dispute rules and sends the transaction back to your acquirer.
3. Your acquirer debits the amount and your processor sends you a notice with a reason code and a deadline.
4. You accept the loss or respond with evidence. Your evidence goes to your acquiring bank, which passes it to the issuing bank.
5. If the issuer still disagrees, the case can continue to pre-arbitration and arbitration.

The deadlines are tight at your end and long at the customer's. Mastercard says merchants typically get 20 to 45 days to respond after they're notified, and that the whole process can take up to 120 days. Each notice carries a reason code that tells you what the cardholder is claiming; our guide to chargeback reason codes explains them.

Which payments can be charged back in Canada?

Card payments on the Visa and Mastercard networks can. Interac Debit can't. That split matters here, because Interac Debit is such a common way to pay in person.

The Visa Debit row catches people out. The card in your customer's wallet may draw on the same chequing account as their Interac card, but a Visa Debit payment goes through Visa. Our guide to Visa Debit in Canada explains the difference.

Can a customer do a chargeback on Interac Debit?

No. Interac says there are zero chargebacks with Interac Debit. Each payment is approved by the customer's bank or credit union in real time, against money already in their account.

That doesn't leave cardholders unprotected. Interac's Zero Liability Policy means a cardholder is reimbursed by their bank or credit union for fraudulent transactions beyond their reasonable control, provided they took appropriate precautions and in line with their account agreement. The cardholder's bank handles it, not your acquirer.

Two practical points for merchants:

• Refunds work differently. Interac says you can process refunds through Interac Debit as long as the cardholder is there to authorize the transaction. Plan for that in your returns policy.
• No chargeback doesn't mean no complaints. Without a chargeback route, a customer unhappy with an Interac sale comes back to you, so your refund policy carries the weight.

Interac Debit is also cheap. Interac puts the cost at around 10 cents per transaction, and its fee page says interchange for Interac Debit is currently set at zero. Our guide to what Interac is covers the rest.

What does Quebec law say about chargebacks?

Quebec writes a chargeback right into its consumer law. The rules apply to distance contracts: contracts made when the merchant and the consumer aren't in each other's presence, after an offer from the merchant. Think online orders and phone sales. Under Quebec's Consumer Protection Act:

Say an online furniture store in Montreal has an order cancelled under the Act on March 2. The store has until March 17 to refund. If it misses that date, the customer can ask their card issuer for a chargeback until May 16, 60 days later. The Act sets out when a consumer can cancel a distance contract in the first place, so if you sell online into Quebec, read those rules with your lawyer or the Office de la protection du consommateur.

Our advice is simpler than the statute: refund cancelled orders within 15 days, everywhere. It keeps you inside Quebec's rule, and it's a good habit anywhere in Canada. One more Quebec point while you're here: the province bans fees for paying by card, as our guide to credit card surcharges in Canada explains. Our Quebec page covers the provincial rules for merchants.

Do other provinces have chargeback rules?

Other provinces have consumer protection laws of their own, and we haven't confirmed each one's rules for this guide. Ontario's guidance shows how provincial rules can lead to a chargeback. Its page on your rights under the Consumer Protection Act says a consumer can ask for a refund when a product isn't delivered within 30 days of the promised delivery date, and it tells shoppers who paid by credit card to let their card provider know about a dispute.

For a merchant, that second line is the important one. In Ontario, the government itself points unhappy credit card customers toward their card issuer. A shop in Ottawa that misses a delivery date by a month should expect a refund request, and if it ignores the request, a chargeback is the obvious next step.

If you sell across provinces, check each province's consumer protection office for its rules on online and phone sales.

What chargeback ratio gets Canadian merchants in trouble?

The same lines as in the US. Visa's Acquirer Monitoring Program divides fraud reports plus disputes by settled card-not-present transactions, and since April 1, 2026 it treats a merchant in the US and Canada as "Excessive" at 150 basis points (1.5%) or more, with at least 1,500 fraud reports and disputes in the month. Visa's VAMP fact sheet also measures acquirers' whole portfolios, at 50 basis points for "Above Standard" and 70 for "Excessive." Mastercard's Security Rules and Procedures require acquirers to act once a merchant's card-not-present fraud passes 100 gross basis points.

Say an online outdoor store in Calgary settles 2,500 card-not-present Visa sales in a month and gets 15 disputes and 10 fraud reports.

• Ratio: 25 ÷ 2,500 = 0.01, or 1.0%, which is 100 basis points.
• That's under Visa's 150 basis point merchant line, and 25 is far below the 1,500 count.
• It's above the 70 basis point level Visa uses for an acquirer's whole portfolio, so expect your acquirer to ask about it.

Our guide to your chargeback ratio works through the formula and what to do about a high month.

What does the Code of Conduct say about chargeback fees?

The Code of Conduct for the Payment Card Industry in Canada, in its current form since October 30, 2024, deals mainly with disclosure, notice, and your right to leave. None of the protections we could confirm caps a chargeback fee, but several still apply to one:

• Your fees should be disclosed. Merchant agreements include a Disclosure of Fees, and your statements, at least monthly, show the rates and totals for interchange, network fees, and all other fees.
• Increases need notice. Your processor must tell you 30 to 60 calendar days before a new or higher fee takes effect.
• You can leave. After a fee change, you can give notice to exit without penalty within 70 calendar days after the change takes effect.
• Complaints have a clock. Your processor must acknowledge a complaint within five business days and investigate and address it within 20 business days.

FCAC's page on merchant rights explains each protection in plain language. If a chargeback fee appears on your statement that you can't find in your agreement, or it went up without notice, put the question to your processor in writing. Our guide to a merchant account in Canada covers the Code in more detail.

How can Canadian merchants prevent chargebacks?

Start with the advantages you have that US merchants don't, then cover the basics.

1. Make Interac easy at the counter. You can't choose for your customers, but a terminal that takes Interac chip and PIN and Interac Flash keeps that option front and centre. Clearo's POS terminals accept Interac, Visa, Mastercard, Apple Pay, and Google Pay.
2. Dip or tap cards instead of keying them. A keyed card in a store is an online-style sale without the online-style records.
3. Use a billing name customers recognize. Visa says the acquirer should submit the name most prominently displayed by the merchant, the one cardholders know you by.
4. Refund cancelled orders within 15 days. That's Quebec's rule; make it your standard.
5. Give delivery dates in writing, and warn customers early when you'll miss one.
6. Screen online orders. The fraud screening built into Clearo's online payments covers AVS, CVV checks, and velocity rules.
7. Ask about pre-dispute tools. Visa's Order Insight shares order details with issuers before a dispute is filed. Visa's Compelling Evidence 3.0 materials come from its US region, so ask your processor whether those tools and rules apply to your Canadian sales. Our guide to chargeback protection explains how these tools differ from paid guarantee services.
8. Keep a dispute log by reason code, and check it monthly.

Our guide on how to prevent chargebacks goes deeper on each cause. Card network dispute rules work the same way in Vancouver as in Halifax. It's the provincial consumer rules, like Quebec's, that change as you cross a border.

Next step

Find out how many of your sales could be charged back at all. Most merchants have never split their card volume into Interac, which can't be, and credit or Visa Debit, which can. Send us a recent statement for a free statement review, and we'll show you that split along with every chargeback fee you're paying. Clearo serves merchants across Canada with interchange-plus pricing and a dedicated rep for every client, and our payment processing includes tools for managing chargebacks. Or contact us to talk it through.