Discover Chargeback FeeThe Fees & Hidden Costs of Discover Disputes
In a Nutshell
In most cases, Discover does not assess a chargeback fee directly, although acquiring banks commonly levy a fee on a per-chargeback basis. However, Discover itself does charge a dispute fee in two instances. First, merchants who breach Discover’s excessive chargeback limits are fined $25 per chargeback. Second, merchants who lose an arbitration chargeback are held liable for a $475 fee.
What is the Discover Chargeback Fee? How Much Will You Have to Pay?
Losing a transaction to a dispute is painful enough. But, the financial sting of a Discover chargeback doesn’t stop there. Every time a Discover cardholder disputes a charge, you’ll also receive a chargeback fee that leaves you even deeper in the red.
In this chapter, I’ll give you a closer look at these penalties, including when Discover chargeback fees are applied and how much they cost.
Discover Chargebacks
As if dealing with chargebacks isn’t hard enough by itself, every card brand has its own set of rules for contesting invalid disputes. For each network, there are different time frames, exemptions, and more. Discover credit cards are no exception, but what does that mean for merchants and consumers? How does the Discover chargeback process work? And what special tactics might merchants need for winning reversals?
What is the Discover Chargeback Fee?
Discover doesn’t normally assess a chargeback fee, though merchant acquirers may. However, Discover does impose a $25 fee per dispute if the merchant is above their excessive chargeback limit.
Discover usually doesn’t assess chargeback fees directly, unless you receive an excessive number of chargebacks (more on this in a second). That said, most processors will assess a fee for every chargeback you receive.
The chargeback fee tacked on by processors can range from $15 to $100 per dispute, depending on your industry, risk level, and what you’re able to negotiate with your merchant service provider. Though, the average fee is around $20 per dispute.
In most cases, chargeback fees are non-refundable, so they stick even if you later win a dispute in representment.
Now, like I alluded to a second ago, Discover will assess their own fee for every dispute you receive above their excessive chargeback threshold. If you breach the Discover excessive chargeback threshold, meaning you receive at least 100 chargebacks per month and have a chargeback ratio above 1%, they will charge you a $25 fee per dispute.
Note that Discover’s fee is in addition to any chargeback fees assessed by your acquirer. So, your total fee per excessive dispute could be $45 or more.
By contrast, Visa’s chargeback fees are a bit more complex. For example, if you chose not to represent a dispute, you may incur a chargeback acceptance fee of up to $15; if you do, you could see a $4 fee. Both Visa’s chargeback acceptance and dispute response fees vary depending on how long you take to respond. The longer you wait, the higher your fee.
What You Don’t Know CAN Hurt You
Not understanding Discover’s chargeback process could be impacting your bottom line. Get the expert help you need now.
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The Total Cost of a Discover Chargeback
Beyond lost revenue, lost merchandise, and chargeback fees, Discover chargebacks dampen operational efficiency, reduce customer lifetime value, and lead to elevated future fraud risks.
A two-figure Discover chargeback fee is frustrating enough. As bad as they are, though, the fees are still just the tip of the iceberg. The true impact of a Discover chargeback extends much further, affecting your:
These are still just a few examples. The true cost of a single Discover card chargeback can reverberate for a long, long time.
