How much more does a chargeback cost a merchant than a refund?
Summary
On Stripe, a chargeback costs $15 the moment it is opened and another $15 if you fight it, on top of losing the sale while it is decided. A refund carries no dispute fee, though Stripe and Square both keep the processing fee from the original payment. Square charges nothing for a dispute at all, and Helcim charges $15 only if you lose.
One $80 sale, three endings
Take an $80 online sale on Stripe's standard rate of 2.9% plus 30¢.
The $15 received fee is not returned. Stripe's documentation says it never returns it unless your contract states otherwise. Refunding in full first does not rule it out either: a customer can still dispute a refunded payment, and Stripe says the received fee may still apply.
Square's dispute page says there are no fees for chargeback management. If you win, Square releases the disputed funds back to you, processing fees included. If you lose, the processing fees are not refunded. Helcim's pricing page lists a chargeback fee of $15 if lost.
Who starts it, and when the money moves
You start a refund. Stripe keeps its processing fees from the original transaction, and Square's help center says the same: when you refund a payment, the processing fees for that payment are not refunded to you. On Stripe the customer sees the credit in about 5 to 10 business days, depending on the bank. Square puts the total at up to 4 to 14 business days, and allows refunds within one year of the original sale.
A chargeback starts with the cardholder's bank. When the issuer opens a formal dispute, Stripe says the payment is reversed immediately and your balance is debited for the amount plus the dispute fee. Square puts an immediate hold on the disputed funds, either from your Square balance or by debiting your linked bank account.
How long a dispute runs
Stripe says card networks typically let cardholders dispute within 120 days of the payment, longer in some cases. You then have a window to respond, usually 7 to 21 days depending on the network, and a missed deadline is an automatic loss. Once evidence is in, the issuer usually takes 60 to 75 days to decide, and the whole cycle can run two to three months. Square gives merchants seven days to submit their information and says the bank can take up to 90 days from the start of the dispute to decide.
The funds are held for the entire dispute, and on Stripe you cannot issue a separate refund while it is open.
Sources
- stripe.com/pricing
- support.stripe.com/questions/dispute-fees-faq
- docs.stripe.com/disputes/how-disputes-work
- docs.stripe.com/disputes/responding
- docs.stripe.com/refunds
- squareup.com/help/us/en/article/3882-payment-disputes-walkthrough
- squareup.com/help/us/en/article/6116-process-refunds
- developer.squareup.com/docs/payments-api/collect-fees/payment-with-app…
- helcim.com/pricing
Related on this site
- Where on a merchant statement do you find what card processing actually cost you?
- What does it cost to get card sales into your bank faster than the next business day?
- What changes once a processor decides your business is high risk?
- What the headline rate leaves out
- Every provider we hold, and which publish a rate
Written by Kaz (pen name). Figures are copied from providers' published pricing pages on the dates shown. We have not used these products. Corrections: contact form.