What it means
A chargeback happens when a cardholder disputes a payment with their bank instead of asking you for a refund. The card issuer pulls the money back through the card network, and your processor takes the disputed amount plus a dispute fee out of your balance while the dispute runs.
In the US, Stripe charges a $15 fee for each dispute, which it keeps even if you win, and since June 2025 another $15 if you counter it, returned when you win. Cardholders usually have about 120 days to dispute. You typically have one to three weeks to respond, and the issuer decides over the following two or so months.
Each dispute carries a reason code from the card network. Visa groups them as fraud, authorization, processing errors and consumer disputes: an unrecognized charge, a duplicate, a product not received, a cancelled subscription still billed. The reason decides what evidence wins: delivery confirmation, login and usage records, the customer's own messages, the terms they accepted.
Networks watch each merchant's dispute rate. Too many disputes can mean monitoring programs, fines and, eventually, losing the ability to take cards.
When a dispute opens, move the amount out of your processor clearing account into a disputed payments account and book the fee as an expense. When it's decided, clear that account: back to clearing if you won, against revenue or to fraud losses if you lost.
Under ASC 606, refunds and chargebacks you expect are variable consideration. If they're material, estimate them and record a refund liability against revenue in the month of the sale, rather than waiting for each dispute to land months later.
Why it matters. Every dispute costs a fee, even one you win, and a high dispute rate can get your processing restricted. The cash leaves the day the dispute opens, so the books need somewhere to hold it until the outcome.
The entry, worked
A customer disputes a $1,200 annual plan. Stripe pulls the $1,200 and a $15 dispute fee from the balance the day the dispute opens.
| Account | Debit | Credit |
|---|---|---|
| Disputed payments receivable | $1,200.00 | |
| Dispute fees | $15.00 | |
| Stripe clearing | $1,215.00 | |
| Total | $1,215.00 | $1,215.00 |
The disputed amount waits in its own account until the decision. Won, it comes back to clearing; lost, it moves to refunds and chargebacks against revenue, or to fraud losses.
Common questions
Do we get the dispute fee back if we win?
Usually not. The dispute fee is kept whether you win or lose; on Stripe, only the separate fee for countering a dispute comes back when you win.
Is a lost chargeback a revenue reduction or an expense?
A customer dispute you lose is usually a reduction of revenue, like a refund. A fraudulent charge you lose is often booked as an operating expense instead. Pick a policy and apply it the same way every month.
Should we just refund instead?
Often, yes. A refund costs only the sale; a dispute adds a fee and counts against your dispute rate. Once a dispute is open, though, you can't refund outside the dispute process.
Where it comes up
The glossary entries, founder guides and lessons on this site that use the term and link here.
- Variable considerationAny part of the price that can change — discounts, rebates, refunds, credits, usage, bonuses, penalties — estimated and included only to the extent a significant reversal is not probableGlossary
- How to reconcile Stripe payouts to your booksA Stripe payout is charges less fees, refunds and disputes, batched across days. How to book it gross, tie it to the bank, and keep revenue right.Guide · 4 min
- Card and ACH payments: applying and reconciling themHow customer card and ACH payments land in the bank net of fees, how to apply them to invoices, handle partial payments and reconcile the deposit.Guide · 6 min
Read further
General information for US companies, not tax, legal or accounting advice. Check the specifics with a CPA before you act on them.