Money, sales tax and addresses · A term for founders abroad
What is a chargeback?
A card payment reversed by the customer's bank at the customer's request, with a fee to the merchant and a mark against its record.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 21 of 105 in the glossary, filed under C.Stripe: how disputes work
Chargeback, for a founder abroad.
When a customer disputes a card payment, their bank takes the money back from the merchant while it decides. The processor charges a dispute fee, which on Stripe isn't returned even if you win, and you usually have 7 to 21 days to send evidence. The decision usually takes 60 to 75 days.
Every dispute counts against the merchant, won or lost. Stripe says the industry treats dispute activity above 0.75% as excessive, and Visa's programme can flag a merchant from a 0.5% ratio and 5 disputes a month. A clear billing descriptor, fast support and easy refunds keep the rate down.
Sources: Stripe: how disputes work; Stripe: card network monitoring programs.
Read next · guide · 3 minKYC, reviews and chargebacks: what banks and processors will ask, and how to answerWhat founders ask next.
- What chargeback rate gets an account closed?
- Processors usually act before the card networks do, around or below 0.75%. The chargebacks guide has Visa's and Mastercard's lines.
- How long can a customer dispute a payment?
- Usually up to 120 days after the payment, longer for something delivered later.
03 · See also
- Money, sales tax and addressesKYC and KYBThe identity checks banks and processors must run: KYC on the people behind an account, KYB on the company itself.Read the term
- Money, sales tax and addressesMerchant of recordA service such as Paddle that sells your product as the legal seller, handling payments, sales tax and VAT, and pays you what's left.Read the term
- Money, sales tax and addressesNexusThe link with a state that obliges a seller to collect its sales tax, created by a presence there or by sales above the state's threshold.Read the term
- Money, sales tax and addressesEconomic nexusSales into a state above its threshold, usually $100,000 a year, which makes a seller elsewhere collect that state's sales tax with no presence there.Read the term
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