Guide · Costs
Chargeback fees: what a dispute really costs you
A chargeback fee is what your processor charges for handling a dispute, on top of the disputed amount. In the US, Stripe charges $15 to receive a dispute and $15 more to counter it, PayPal charges $15 to $30, and Square charges nothing. The fee is the smallest part of the bill.
Key takeaways
- The fee is separate from the money. You lose the disputed amount and pay a handling fee on top.
- Winning rarely refunds it. Most processors keep the fee for receiving a dispute, win or lose.
- It varies a lot. From $0 at Square to $15 to $30 at Stripe and PayPal in the US.
- The real cost is bigger. Delivered goods, staff time and your dispute rate all cost money too.
What is a chargeback fee?
A chargeback fee (processors also call it a dispute fee) is what your payment processor charges you to handle a dispute. It’s not the disputed amount. That money is taken separately, at the same moment.
So when a $200 charge is disputed at Stripe, your balance drops by $200 plus the fee. You pay the fee whether the customer was right or wrong.
The fee comes from your processor, not the card network, and it’s set by your contract. That’s why it ranges so widely.
What major US processors charge
| Processor | Fee | Returned if you win? |
|---|---|---|
| Stripe | $15 when a dispute arrives, plus $15 if you counter it | The $15 received fee: no. The $15 countered fee: yes. |
| PayPal | $20 chargeback fee on card payments not made through a PayPal account or guest checkout. $15 standard or $30 high-volume dispute fee on PayPal checkout payments. | Not stated on the fee page. Check your user agreement. |
| Square | No fees for chargebacks, per Square’s US help center | Nothing to return |
Stripe’s fees differ by country: for example, CAD 15 in Canada, GBP 20 in the UK and EUR 20 in euro countries. If you use a bank, an independent sales organization or a terminal provider, your fee is in your merchant agreement. Read it. Some contracts also charge for each response, or for later stages.
Insight: Stripe’s separate fee for countering a dispute changes the math on small charges. Fight a $20 dispute and lose, and you’re out the $20 plus $30 in fees. Win it, and you still paid $15 for the privilege.
When you’re charged, and when you’re not
- When the chargeback arrives. The received fee is deducted right away, with the disputed amount.
- When you respond. Some processors, Stripe included, charge again when you counter.
- Not for most inquiries. Stripe says you can resolve an inquiry without a dispute fee by answering it or refunding in full. That’s the cheapest exit there is.
- Not for refunds you give yourself. A refund before a dispute usually costs no dispute fee. A refund after a chargeback can cost you twice.
The costs nobody puts in the fee table
The fee is the visible part. A lost chargeback also costs:
- The goods or service you already delivered. The appointment happened. The product shipped. You don’t get it back.
- Staff time. Finding records, reading the notice, writing the response.
- Compliance cases. Stripe collects a $500 network fee when you contest a Visa or Mastercard compliance dispute, refunded if you win.
- Arbitration. If a case goes all the way to the card network, the loser pays a network review fee. See pre-arbitration and arbitration.
When your dispute rate starts costing money
Every chargeback counts toward your dispute rate, win or lose. Push it too high and the card networks charge fines on top of everything else.
- Visa monitors fraud reports plus disputes against your transactions. Its Excessive line is a 1.5% ratio with at least 1,500 events a month in the US, Canada, the EU, Asia Pacific and Latin America. Visa assesses fees to merchants above it.
- Mastercard flags merchants with 100 or more chargebacks and a 1.5% rate. Fines start at $1,000 in months two and three and climb to $100,000 a month after a year and a half.
Processors often act well before those lines, with holds, reserves or a closed account. A chargeback you win still counts.
A simple example
| Fight and lose | Fight and win | Accept | |
|---|---|---|---|
| Disputed amount | −$400 | $0 (returned) | −$400 |
| Received fee | −$15 | −$15 | −$15 |
| Countered fee | −$15 | $0 (returned) | $0 |
| Total | −$430 | −$15 | −$415 |
For a mid-sized charge with good records, fighting costs $15 more than accepting if you lose, and saves $400 if you win. For tiny charges, the fees can outweigh the sale. Decide case by case. More in how to fight a chargeback.
Dispute Daddy is a flat $99 a month, not a cut of what you recover. It builds the response from your notice and records, and you submit it. See pricing.
