Shopify Chargeback InsuranceUnderstanding The Difference Between Shopify Protect & Fraud Protect for Shopify Payments
In a Nutshell
Shopify offers two programs that work as a form of Shopify chargeback insurance: Fraud Protect and Shopify Protect. They reimburse merchants for certain fraud-based chargebacks on eligible transactions. Understanding what’s protected — and what’s NOT — can help merchants develop a comprehensive fraud prevention strategy.
Shopify Offers Built-in Fraud Coverage That Works as a Form of Shopify Chargeback Insurance. Here’s What to Know About it.
If you sell on Shopify, you’re inevitably going to encounter a chargeback sooner or later. To help merchants fulfill orders with greater confidence, Shopify has developed a built-in, free-to-use chargeback protection service. It essentially functions like a form of eCommerce fraud insurance catered specifically for sellers on the Shopify platform… with a few caveats and limitations, of course.
In this chapter, we’ll take a look at both Shopify Protect and the legacy Fraud Protect services. We’ll see how they work, how they differ, how you can switch to Shopify Protect if you’re still using older product, and why you might want to upgrade.
Shopify Chargebacks
If you sell on Shopify, you’ll want to know how chargebacks work on the platform ahead of time. Don’t wait until you receive a Shopify dispute to find out. In this Knowledge Guide, we’ll run down everything you need to know about Shopify chargebacks, from statistics and benchmarks to response and prevention strategies.
What is Fraud Protect for Shopify Payments?
Fraud Protect for Shopify Payments is a legacy product offered by Shopify.
The company rolled out Fraud Protect in 2018 as a pay-to-play chargeback protection service for merchants using Shopify Payments. Unlike its newer incarnation, Shopify Protect, the legacy Fraud Protect service charged a small fee for every order protected.
Say a protected order later morphed into a fraud-related chargeback. Fraud Protect would refund the merchant for the amount lost in the dispute, plus the $15 Shopify chargeback fee.
All merchants receive access to Shopify’s basic fraud analysis tools at no additional cost. Fraud Protect was an add-on service that offered sellers enhanced protection against fraud-related chargebacks for an additional cost.
Shopify Protect vs. Fraud Protect: What's the Difference?
Shopify Protect is basically a newer, free to use version of Fraud Protect, which required a premium for users.
At their core, Shopify Protect and Fraud Protect both serve a similar purpose: they’re chargeback protection services that effectively insure Shopify merchants against criminal fraud disputes for eligible orders.
The main difference is that Fraud Protect is a paid service; for a small fee per transaction, Fraud Protect would provide “full protection from fraudulent chargebacks on protected orders.” This only applies to orders completed using Shopify Payments and which were fulfilled according to Shopify’s guidelines.
In June 2022, the eCommerce platform launched Shopify Protect. Essentially a new and improved — and most importantly, free — version of Fraud Protect, Shopify Protect worked essentially the same way as its predecessor service.
There is one other big difference, though. Shopify Protect only covers orders made through Shop Pay, a consumer-facing, one-click checkout experience that sellers can enable in their Shopify stores, as well as on Facebook, Instagram, and Google. If the transaction was not made through Shop Pay, then it’s not protected.
Merchants who have been with Shopify for a while may still be using (and paying for) Fraud Protect. Sellers can switch from Fraud Protect to Shopify Protect at any time, but this upgrade is irreversible.
Why You Can’t Combine Shopify Protect & Fraud Protect for Shopify Payments
Because Shopify Protect is essentially the successor service to Fraud Protect, Shopify merchants can’t use both services simultaneously. Instead, sellers must pick one service.
Specifically, merchants still using the legacy, pay-per-use Fraud Protect may choose to upgrade to the newer, free-to-use Shopify Protect at any time. However, once Fraud Protect is deactivated and the seller switches over to Shopify Protect, there’s no going back; the switch is permanent.
How to Switch from Fraud Protect to Shopify Protect
If you’re currently using Fraud Protect, you can switch to Shopify protect by first deactivating Fraud Protect and then activating Shop Pay. When you do so, Shopify Protect will automatically be enabled.
First, deactivate Fraud Protect:
- 1. In Shopify admin, go to Settings → Payments → Manage
- 2. Click Deactivate Fraud Protect in the Fraud Protect for Shopify Payments section
- 3. Select Confirm Deactivation
Then, immediately activate Shop Pay:
- 4. In Shopify admin, go to Settings → Payments → Manage
- 5. Click Manage in the Shopify Payments section
- 6. Check the Shop Pay box in the Shop Pay section, then click Save
- 7. Shopify Protect will now activate automatically
If you have already activated Shop Pay, you can ignore steps 4 through 7.
Don’t have Shop Pay activated yet? You’ll be entirely unprotected against chargebacks if you only deactivate Fraud Protect but do nothing else. Remember that you must deactivate Fraud Protect and activate Shop Pay afterwards. Only then will you be able to resume coverage under Shopify Protect.
As you can see, it makes sense for most merchants to switch from Fraud Protect to Shopify Protect. You benefit from newer technology and a service that’s more tightly integrated with Shop Pay.
Best of all, Shopify Protect is free to use — a distinction that few other chargeback protection services can claim.
But, if you’re still on Fraud Protect, just remember that you can’t go back once you deactivate it and switch over. In other words, while it’s a no-brainer, it’s still a consequential and irreversible decision.
