How a chargeback fee works
When the issuer raises a chargeback, the acquirer debits the merchant for the transaction amount and adds the fee, by deduction from the next settlement or from a reserve. The fee is set in the merchant agreement or the provider's price list, not by the card schemes, so it differs from one provider to the next.
Some providers return the fee when the merchant wins the dispute, and many do not. Fees tend to be higher for merchants in sectors with many disputes, and for merchants placed in a scheme's monitoring programme.
Who pays a chargeback fee
The merchant pays. Where a payment facilitator or a marketplace stands between the acquirer and the seller, the acquirer charges the facilitator, which sets its own fee to its sub-merchants.
Other stages have charges of their own: pre-dispute alerts are billed per alert, and a case that reaches the scheme carries an arbitration fee.
Why the fee matters when pricing a payment product
On a low-value sale the fee can be larger than the order, which changes the sum on whether to contest a dispute or refund early. A PSP setting its own fee weighs the labour in each case and its exposure when a merchant cannot pay.
Where a chargeback fee shows up in a platform
Modules that do the work
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Merchant onboardingBusiness sign-up, verification and underwriting, from application to first payment.
- BackofficeOne console to run the platform: customers, money, risk, content and staff permissions.