Chargeback Fee

A chargeback fee is a fixed charge that a merchant's acquirer, payment service provider or payment facilitator applies each time a cardholder's issuer raises a chargeback against one of the merchant's transactions. It covers the cost of processing the dispute, notifying the merchant and handling any response, and is separate from the disputed amount itself, which is also debited from the merchant. Fees vary by provider and by the merchant's risk level, and many providers charge them even when the merchant later wins through chargeback representment, though some refund the fee in that case. Further stages, such as pre-arbitration and arbitration, can carry their own, much higher charges, including card scheme fees. Merchants with many chargebacks may also pay penalties under scheme monitoring programmes if their chargeback ratio becomes too high. Preventing disputes, for example through clear descriptors and fast refunds, is usually cheaper than paying the fees.